Chapter 13, known as the "Wage Earner Bankruptcy," is designed for those individuals who are able to repay a portion of their debts over a three-to-five year period of time. Chapter 13 will allow you to repay the past due portion of your mortgage over time while you begin to make your new monthly payments. As long as you remain current on your Chapter 13, your mortgage foreclosure cannot go forward and you retain possession of your home.

During the course of your Chapter 13 bankruptcy, you will not be permitted to save any money, including putting money into a pension plan or repaying a pension loan. This is because, by filing a Chapter 13 bankruptcy and by seeking the protection of this portion of the law, you are agreeing to pay to the trustee all money not being spent on necessities each month. If you were to put money away for the future, that would break the terms of your agreement with the court. Although you will not be able to save money for the future, you will be saving your home and your future will not include the possibility of foreclosure.