Chapter 13 bankruptcy

A type of bankruptcy used by individuals who want to reorganize their debts and pay back a portion of the money they owe to creditors. The debtor pays something each month for several years to the bankruptcy court, which distributes the funds to the creditors. When the payments are completed, the debts are discharged. Chapter 13 bankruptcies allow individuals to hold onto more assets than Chapter 7 bankruptcies, which involve total liquidation. See also Chapter 7 bankruptcy, Chapter 11 bankruptcy.