Chapter 13 Bankruptcy

Chapter 13 bankruptcy is occasionally called the "wage earner’s bankruptcy plan". It is an alternative to filing Chapter 7 bankruptcy, the liquidation plan. If you do not qualify to file Chapter 7 bankruptcy, Chapter 13 bankruptcy might be a good option for you. In order to qualify for chapter 13 bankruptcy you must be an individual, husband or wife, or a sole proprietor. You must have a regular income, and you must have unsecured debt of less than $307,675 and secured debt of less then $922,975. (These amounts are periodically adjusted based on the consumer price index).

Just as in a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy requires that the debtor, normally with the help of a bankruptcy attorney, files a Bankruptcy Petition. However, in addition, the debtor is required to file a schedule of liabilities and assets, a list of current income and expenses and a forms stating other financial data. In addition, the bankruptcy court must be notified of any contracts or unexpired leases that the debtor has. Most debtors hire a bankruptcy attorney to make sure all information is complete and then consolidated in an appropriate format to be filed with the bankruptcy court.

Payments toward a Chapter 13 payment plan are made to the appointed bankruptcy trustee who will oversee a debtors case and ensure creditors are paid. The order creditors are paid is determined by the type of claim they hold. A creditor’s claim can be priority, secured or unsecured debt. All debt, after priority debt, will be paid in order according to bankruptcy code rules.

There are several advantages to filing chapter 13 Bankruptcy. One of the major advantages is you will be able to stop foreclosure and keep your home. Additionally, under the payment plan some of your debt will be paid over the 3 to five year plan period and your creditors will not be allowed to initiate or continue lawsuits, garnish your wages or telephone you requesting payment of debts. They will instead be required to abide by the debt re-payment schedule outlined in the bankruptcy plan.

Chapter 13 Bankruptcy Attorney

After filing the bankruptcy petition, a Chapter 13 bankruptcy lawyer will work with his or her client to outline a repayment plan which will allows the debtor to pay off debts in three to five years. This plan will be filed with the local bankruptcy court in your district and will generally begin 30 to 45 days after the bankruptcy begins.

Generally, an experienced chapter 13 bankruptcy attorney is an important ally in the bankruptcy process, answering your questions and helping to keep the creditors off your back.

Bankruptcy Term of the Day


A creditor is the person or entity owed money by a debtor.

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Latest Bankruptcy Question

How long does it take to rebuild credit after filing for bankruptcy?

Bankruptcy will remain on your credit report for ten years for Chapter 7 and seven years for Chapter 13.

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