California Chapter 13 Bankruptcy: The Repayment Plan

Chapter 13 is a repayment plan over 3 years (if you're below California's median income) or up to 5 years (at or above median); no plan exceeds 5 years (11 U.S.C. § 1322(d), § 1325). It lets people with regular income cure a mortgage or car default and keep their property.

This is general information, not legal advice. Whether Chapter 13 fits your situation is fact-specific — talk to a California bankruptcy attorney.

Chapter 13 is the repayment-plan bankruptcy. Instead of liquidating, you keep your property and repay some or all of your debts over time through a court-approved plan.

How the plan works

You propose a plan to pay your creditors from your future income. The trustee collects your payments and distributes them. The plan’s length depends on your income:

3 years if your income is below California’s state median.
Up to 5 years if you’re at or above the median.

No plan can exceed five years (11 U.S.C. § 1322(d), § 1325). At the end, qualifying remaining balances are discharged.

Curing defaults and keeping property

Chapter 13’s big advantage is catching up on secured debts. If you’ve fallen behind on a mortgage or car loan, you can add the missed payments to your plan and cure the default over the plan’s life — often letting you keep your home or vehicle while you stay current on regular payments going forward.

Income and the median

Whether you’re below or above California’s median income matters for both plan length and eligibility. The same median figures drive the means test, which generally determines whether Chapter 7 is available to you.

Exemptions still matter

Even though you’re not liquidating, California’s exemptions affect how much you must repay unsecured creditors. See California exemptions. And like every chapter, filing triggers the automatic stay.

To get matched with a local California bankruptcy attorney, connect with a lawyer.

Frequently asked questions

How long does a Chapter 13 plan last?

Three years if your income is below California's state median, or up to five years if you're at or above median. No plan can exceed five years (11 U.S.C. § 1322(d), § 1325).

Can Chapter 13 stop a foreclosure?

Yes. Chapter 13 lets you cure a mortgage default over time by adding the missed payments to your plan, which can let you keep your home while staying current going forward.

How is Chapter 13 different from Chapter 7?

Chapter 7 liquidates and discharges debts quickly, while Chapter 13 repays some or all debts over time. Chapter 13 suits people with regular income who want to keep property and catch up on secured debts.

Related guides

Automatic Stay & Discharge in California Bankruptcy Filing bankruptcy triggers the automatic stay (11 U.S.C. § 362), an immediate halt to most collection — lawsuits, wage garnishment, repossession, and foreclosure. A discharge (11 U.S.C. § 524, § 727) permanently bars collecting discharged debts, but some debts are non-dischargeable (11 U.S.C. § 523), including most recent taxes, student loans, child support, alimony, and fraud debts.

California Bankruptcy Exemptions California opted out of the federal bankruptcy exemptions, so filers cannot use the federal § 522(d) set. Instead California offers a choice between two state systems — you must pick one, not mix: the CCP § 704 series (with a large homestead under § 704.730) or the CCP § 703.140(b) bankruptcy-only set (with a wildcard at § 703.140(b)(5)).

Chapter 7 Bankruptcy in California Chapter 7 is liquidation bankruptcy: a trustee can sell nonexempt property to pay creditors, and the individual debtor receives a discharge of most unsecured debts (11 U.S.C. § 727). It requires passing the means test and completing credit counseling. Most California filers keep their property using California's exemptions.

The Chapter 7 Means Test in California The Chapter 7 means test (11 U.S.C. § 707(b)) compares your income to the median income for your household size in California. Below median, you generally qualify; above median, a disposable-income calculation may create a presumption of abuse. California's median figures update periodically via the U.S. Trustee.

Chapter 13 Bankruptcy in California