Chapter 13 bankruptcy filing is a way for individuals in the United States to undergo a financial reorganization supervised by a federal bankruptcy court.

An individual who is badly in debt can file for bankruptcy either under Chapter 7 (liquidation, or straight bankruptcy) or under Chapter 13 (reorganization).

Under Chapter 13, the bankrupt individual agrees to pay his creditors over a 3- to 5-year period. During this period, his creditors cannot attempt to collect on the individual's previously incurred debt except through the bankruptcy court. In general, the individual gets to keep his property, and his creditors end up with less money than they are owed.

The disadvantage of filing for personal bankruptcy is that a record of this stays on the individual's credit report for 10 years, and most creditors will not risk lending money to such an individual.

2003 Statistics

Bankruptcy filings by individuals:

Bankruptcy filings by businesses:

  • Chapter 7 filings: 21,008
  • Chapter 11 filings: 9,185
  • Chapter 12 filings: 698
  • Chapter 13 filings: 5,201

The total number of bankruptcies rose 7.4 percent over the previous twelve months. These totals were for the 12-month period ending September 30, 2003.

Source: November 14 2003 News Release, Administrative Office of the U.S. Courts. (External link to PDF file: [1])