Chapter 13 is another form of bankruptcy available to debtors and is essentially a court-enforced reorganization of the debtor’s financial situation.

There are a few reasons why a debtor might be better suited for a chapter 13 bankruptcy than a chapter 7. The most common reason an individual files chapter 13 is to avoid a foreclosure on their home; Chapter 13 allows the debtor to resume making mortgage payments while the court allows the debtor to cure the mortgage arrearage over a period of up to five years.

Other reasons people file chapter 13 are that they are not eligible for chapter 7 because they have filed chapter 7 in the previous 8 years, they make too much money, or they own a piece of property that would be in danger of being liquidated by the chapter 7 trustee.

For many people in financial distress, chapter 7 is the best alternative. However, for some, Chapter 13 is more appropriate.