Chapter 13 allows individual debtors (including sole proprietors) to, among other things, protect real property from foreclosure by curing delinquent mortgage and property tax obligations over time, avoid eviction, assume or reject executory contracts, and modify secured claims—including, in some cases, mortgage liens on a primary residence. Chapter 13 also permits the discharge of most pre-petition debts, including but not limited to credit cards, utility bills, medical expenses, older income taxes, deficiencies, lines of credit, rejected contract obligations, personal loans, personal guarantees, condo or HOA dues, mortgages, car loans, and debts arising from divorce or separation property settlements.

There are no income-based eligibility restrictions for Chapter 13. Instead, any individual with regular income may qualify—provided their debts fall within the statutory limits. To be eligible, a debtor must have less than $419,275 in unsecured debt and less than $1,257,850 in secured debt.

While the case is active, the debtor retains exclusive possession and control of estate property and may use, sell, or lease that property—subject to court approval for transactions outside the ordinary course of business. A trustee is automatically appointed in all Chapter 13 cases. The trustee is responsible for, among other duties, reviewing the debtor’s financial affairs, assisting with plan confirmation, and serving as disbursing agent for certain plan payments. A co-debtor stay also applies.

In a Chapter 13 case, the debtor retains exclusive authority to file a plan and must do so within 14 days of the petition date. Creditors do not vote on the plan; instead, they are given notice of the confirmation hearing and the opportunity to object. To be confirmed, a Chapter 13 plan must generally:

• Be proposed in good faith
• Be feasible
• Provide for full repayment of all priority unsecured claims over a 3–5 year term (e.g., recent taxes, domestic support obligations, administrative expenses)
• Satisfy the “Best Interest Test” by ensuring general unsecured creditors receive no less than they would in a hypothetical Chapter 7 liquidation
• Satisfy the “Best Efforts Test” by committing all projected disposable income over the 3–5 year term to repay general unsecured creditors

Once all plan payments are completed, the debtor will receive a discharge. Notably, the scope of discharge in Chapter 13 is slightly broader than in Chapter 7. For example, certain debts stemming from property settlements in divorce or separation proceedings may be discharged in Chapter 13 but are non-dischargeable in Chapter 7.