A reorganisation bankruptcy for individuals with regular income: debts are repaid in part through a court-approved plan.
Chapter 13 restructures rather than liquidates. An individual with regular income proposes a repayment plan, makes payments to a trustee who distributes them to creditors, and receives a discharge of qualifying remaining balances on completing the plan.
The reason people choose it over Chapter 7 is usually property. Chapter 13 provides a mechanism to cure mortgage arrears over time while keeping the home, and it does not require surrendering non-exempt property, because creditors are being paid through the plan instead. It is also the route available to people whose income is too high to qualify for Chapter 7.
The commitment is real: plans run for years, and the discharge generally arrives only on completion. A plan that cannot realistically be sustained is a common failure mode, and cases that fall out of plan can end without the relief sought.
Chapter 13 plans are drafted documents that must satisfy statutory tests and be confirmed by the court, and the choice between Chapter 7 and Chapter 13 is a genuine analysis rather than a preference. This is one of the least practical areas to approach without advice.
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