Chapter 13 is bankruptcy for people who need to keep something, usually a house, sometimes a business, sometimes a vehicle with equity. It's a federal repayment plan that runs three to five years, ends in a discharge of remaining unsecured debt, and protects you from creditors the entire time.
When Chapter 13 is the right tool
- You're behind on your mortgage and want to keep the house. Chapter 13 stops the foreclosure sale and lets you cure the arrears over the life of the plan while staying current on the regular payment.
- You make too much for Chapter 7. Higher-income households often fail the means test for Chapter 7 but qualify for a Chapter 13 plan that still discharges most of the debt at the end.
- You have non-exempt assets. Equity above Idaho's exemptions can be protected by paying that amount into the plan instead of surrendering the asset.
- You filed Chapter 7 too recently. The 8-year bar on Chapter 7 doesn't block a Chapter 13 filing.
How a Chapter 13 plan is built
We start with three numbers: your monthly income, your reasonable living expenses, and what you'd have to pay creditors at minimum under the means test. The difference becomes your monthly plan payment. Most plans pay secured creditors in full, priority debts in full, and unsecured creditors a fraction of what's owed, often just pennies on the dollar.
At the end of the 3- to 5-year plan, the bankruptcy court issues a discharge order wiping out the remaining unsecured balance.
Lien stripping: getting rid of a second mortgage
If your home is worth less than the balance on your first mortgage, a second mortgage or HELOC becomes fully unsecured. In Chapter 13, that lien can be stripped and the underlying debt treated like a credit card, then wiped out at discharge. This single tool has saved Idaho homeowners tens of thousands of dollars.
Timeline
- Day 0: Free case review.
- Days 7–21: Plan drafted. Petition filed. Foreclosure stops.
- Day ~45: 341 meeting of creditors.
- Day ~75: Confirmation hearing, where the plan becomes binding.
- Years 1–5: Monthly plan payments.
- End of plan: Discharge of remaining unsecured debt.
Cost
The court filing fee is $313. Attorney fees in Chapter 13 are court-approved and typically paid through the plan rather than up front, which means you can usually file for very little out of pocket. We walk through the exact numbers for your case at your free consultation.