Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Petition

What is a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy is also known as a “wage earners” bankruptcy is typically used by those bankruptcy filers who exceed the income limits of a Chapter 7 bankruptcy. Unlike a Chapter 7 bankruptcy in which non-exempt property is sold of to repay creditors, a Chapter 13 will give you the opportunity to gradually eliminate outstanding debt without having to give up any property. When you file for a Chapter 13 bankruptcy, you are required to propose a payment plan to the Court indicating how you utilize future income to pay outstanding debt. Chapter 13 repayment plans last anywhere between three to five years.

Who is Eligible to File a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy applies only to married couples and individuals. Businesses and corporations are not permitted to file a Chapter 13 bankruptcy. In order to qualify for a Chapter 13 bankruptcy, one of the key requirements is that you have to be able to prove to the Court that you will have sufficient disposable income at the end of each month to contribute to the Chapter 13 bankruptcy payment plan.

How Does a Chapter 13 Bankruptcy Work?

The first step of a Chapter 13 begins with filing a petition with the bankruptcy court that serves the area in which the debtor has residence. Thereafter, a Chapter 13 bankruptcy payment plan has to be proposed to the Court. The duration of the plan is based on the debtor’s income – for those Chapter 13 bankruptcy filers who earn more than the median income for their state will have to commit to a five-year plan; those filers who earn below the state’s median income are required to make payments for three years.

What Are My Responsibilities in a Chapter 13 case?

Like any other bankruptcy chapter, a Chapter 13 bankruptcy filer has several obligations towards his or her bankruptcy case. These include:

  • Filing the correct documents with your bankruptcy petition.
  • Paying the Court filing fee.
  • Making on-time and full payments towards the payment plan.
  • Strictly following the plan.

What are the differences between a Chapter 13 and a Chapter 7 bankruptcy?

Under the United States Bankruptcy Code, consumers can either file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, the debtor can eliminate most unsecured debt but may be required to surrender certain assets. Once you received your Chapter 7 bankruptcy, you are no longer obligated to pay back the debts that were listed on your bankruptcy petition. A Chapter 13 bankruptcy encompasses a payment plan through which creditors are paid over time. Furthermore, you will not be required to relinquish any property. If you honor your Chapter 13 bankruptcy payment plan, any remaining balances on certain debts will be eliminated at the end of the term.

What debt cannot be eliminated by 13 bankruptcy discharge?

A Chapter 13 bankruptcy does not eliminate all debt, some of which include:

  • Child and spousal support.
  • Student loans.
  • Restitution obligations and criminal fines.

How Can A Bankruptcy Attorney Help with my Chapter 13?

Obtaining the help of a knowledgeable bankruptcy attorney is paramount to your success in a Chapter 13 bankruptcy. At, our experienced bankruptcy attorneys will be by your side every step of the way. Schedule your free initial consultation to determine whether a Chapter 13 bankruptcy is the best option for you.