This page was written, edited, reviewed & approved by Emil J. Fleysher following our comprehensive editorial guidelines. Emil J. Fleysher, the Founding Partner, has 15+ years of legal experience as a bankruptcy attorney. Our last modified date shows when this page was last reviewed.
Chapter 13 bankruptcy offers a way for individuals with regular income to repay their unsecured debts over time. Unlike Chapter 7, which eliminates most debts, Chapter 13 helps you reorganize your debts and create a debt repayment plan that fits your financial situation.
Fleysher Law Bankruptcy & Debt Attorneys helps you understand how to file bankruptcy and what steps you need to take to qualify. Our experienced bankruptcy attorneys will guide you through the bankruptcy proceedings and ensure you meet all legal requirements.
We will explain the details of your monthly payments, help you with your financial affairs, and make sure that you have the best chance of a successful bankruptcy case.
Chapter 13 bankruptcy is available for individuals with regular income who are struggling with unsecured debts like credit card debt or medical bills. To qualify, you must have enough disposable income to make monthly payments toward your debt repayment plan. Chapter 13 works best for those who have a steady job or other reliable income sources.
To file, you must meet certain eligibility requirements based on federal bankruptcy law. These include limits on the amount of secured debts (like mortgage payments or car loans) and unsecured debts. If you owe more than the allowable limits for secured and unsecured debts, you may not qualify.
In addition, you must have filed your tax returns for the last few years. An experienced bankruptcy attorney can help you understand these requirements and determine if Chapter 13 is the right choice for you.
To qualify for Chapter 13 bankruptcy, your income must meet certain requirements. The bankruptcy court will assess your monthly net income compared to your monthly living expenses. If you have enough income to pay back part of your unsecured debts, you may be eligible for a Chapter 13 repayment plan.
The amount you need to pay will depend on your disposable income. This is the income left after subtracting your necessary living expenses, such as mortgage payments, utilities, and groceries. If your disposable income is high, your monthly payment to creditors may be higher. If your income is lower, you may qualify for a smaller monthly payment or a longer repayment plan.
If you have delinquent mortgage payments or other missed payments, Chapter 13 can help you catch up on those payments while keeping your property.
| Feature | Chapter 13 Bankruptcy | Chapter 7 Bankruptcy |
|---|---|---|
| Eligibility | Requires regular income; no debt limit for unsecured debts | Income limits apply; you must pass the test for eligibility |
| Repayment Plan | Repay debts over 3 to 5 years. | There is no repayment; most debts are wiped out |
| Debt Types | Includes secured debts like mortgages and unsecured debts like credit cards | Unsecured debts are wiped out; secured debts may require payment |
| Asset Protection | Can protect secured property like a house or car | Assets may be liquidated to repay creditors |
| Debt Discharge | Only remaining unsecured debts are discharged after the repayment plan | Most unsecured debts are discharged immediately |
| Filing Process | Requires filing a repayment plan and regular payments | One-time discharge; simpler process |
| Impact on Property | Allows you to keep your property if you continue payments | Property may be sold to pay off creditors |
Filing for Chapter 13 bankruptcy involves several essential steps. Below, we’ll outline the key actions you need to take to get started. These steps will guide you through the bankruptcy filing process, ensuring you meet all the necessary requirements.
Before you file for Chapter 13 bankruptcy, you’ll need to collect various financial documents. These include details of your monthly income, monthly expenses, and all of your debts. You’ll also need to provide your tax returns, proof of income, and information about secured debts like your mortgage payment or car loan.
This information is essential for the bankruptcy court and will be used to create your debt repayment plan. Make sure you have accurate and up-to-date documents to avoid delays in the filing process. If you have any questions about the documents required, a bankruptcy attorney can assist you in gathering everything you need.
Before filing for Chapter 13 bankruptcy, you must complete a credit counseling session. This step is required by federal law and must be done through an approved credit counseling agency. The purpose of the counseling is to help you understand your financial situation and explore alternatives to bankruptcy, such as debt settlement or a debt repayment plan.
The counseling typically lasts about 60 to 90 minutes and can be done online, over the phone, or in person. After completing the session, you’ll receive a certificate of completion, which you must file with the bankruptcy court as part of your bankruptcy petition. This certificate confirms that you’ve considered other options and are moving forward with Chapter 13 bankruptcy.
After completing credit counseling, the next step is to file your bankruptcy forms with the bankruptcy court. These forms include details about your income, expenses, debts, and assets. You will also need to include a list of creditors that you owe money to, such as unsecured creditors and secured creditors like mortgage lenders or car loan providers.
Your bankruptcy attorney will help you fill out the necessary forms accurately. These forms are important because they help the bankruptcy judge and bankruptcy trustee understand your financial situation and determine the appropriate debt repayment plan. Filing the forms correctly is crucial, as any errors could delay the process or lead to a denial of your case.
Once the forms are filed, the bankruptcy court will assign you a bankruptcy trustee who will oversee your case.
After filing your bankruptcy forms, the next step is to submit a proposed repayment plan to the bankruptcy court. This plan outlines how you will pay back your unsecured creditors, secured creditors, and other debts over the next three to five years. Your monthly payment will be based on your disposable income, which is the amount left after covering your monthly expenses.
The bankruptcy trustee will review your plan to ensure it meets the requirements of Chapter 13 bankruptcy. Your repayment plan must show that you will be able to make the monthly payments and that you will repay as much of your unsecured debts as possible during the plan period. If the plan is approved, the bankruptcy judge will confirm it.
Working with a bankruptcy attorney can help you create a plan that is realistic and aligns with your financial situation.
After submitting your proposed repayment plan, you will need to attend the 341 Meeting of Creditors. This is a mandatory meeting where you, the bankruptcy trustee, and your unsecured creditors will discuss your bankruptcy case.
During the meeting, the trustee will ask questions about your financial situation, including your income, debts, and any assets. Creditors may also ask questions about your financial affairs. However, most creditors do not attend. The meeting is usually straightforward, and it’s your chance to provide clarity on your financial information.
The 341 hearing is typically held a few weeks after filing. Be prepared for the meeting by having all required documents and answers ready. With the help of your bankruptcy attorney, you can ensure that the process goes smoothly and that any questions from creditors are addressed.
After the 341 Meeting of Creditors, the next step is to have your repayment plan confirmed by the bankruptcy judge. The judge will review your proposed plan to make sure it meets all requirements under bankruptcy law. This includes verifying that your plan will provide fair treatment for your unsecured creditors and that you can afford the monthly payment based on your disposable income.
During the confirmation hearing, the bankruptcy judge may approve the plan as is, or they may ask for changes. If creditors or the bankruptcy trustee raise any objections, you or your attorney may need to adjust the plan. Once the plan is confirmed, you must begin making monthly payments to the bankruptcy trustee, who will distribute the funds to your creditors.
With the plan confirmed, you are officially on your way to completing your Chapter 13 bankruptcy.
Once you’ve filed for Chapter 13 bankruptcy and had your repayment plan confirmed, the next steps involve staying on track with your monthly payments and fulfilling the terms of your plan.
Here’s what you can expect next in the process.
After your Chapter 13 bankruptcy plan is confirmed, you must begin making monthly payments to the bankruptcy trustee. These payments will be distributed to your unsecured creditors and secured creditors, such as mortgage lenders or car loan companies. Your payments are based on your disposable income, which is determined by your monthly living expenses and monthly income.
You must make these payments on time each month. Failing to make payments could result in your case being dismissed or your repayment plan being modified. If you’re unable to make the required payments, contact your bankruptcy attorney right away to discuss your options.
Filing for Chapter 13 bankruptcy will have an impact on your credit score. While it will likely cause a decrease, remember that Chapter 13 is a step toward rebuilding your finances. Your credit report will reflect the bankruptcy for up to 7 years, but the effects on your credit score will lessen over time, especially if you stay current with your monthly payments and manage your finances responsibly.
After completing your repayment plan, you’ll be in a better position to start rebuilding your credit. You can begin by applying for secured credit cards or taking out small loans and making timely payments. These positive actions will help raise your score gradually.
Though the bankruptcy discharge may initially lower your credit score, Chapter 13 bankruptcy can help you get a fresh start and improve your financial situation in the long run.
During your Chapter 13 bankruptcy plan, you may have the option to pay off your debt early or modify your repayment plan if your financial situation changes. If you receive a raise, inherit money, or experience a significant improvement in your disposable income, you might be able to pay off your unsecured debts faster, reducing the overall time of your repayment plan.
On the other hand, if your circumstances worsen, you can request a modification to reduce your monthly payment or extend the length of your repayment plan. The bankruptcy court must approve any changes, and your bankruptcy attorney can help you understand the process. If your income decreases or you face unexpected expenses, modifying the plan ensures you don’t fall behind on payments.
Whether you’re looking to finish early or need to adjust due to financial changes, there are options available to make Chapter 13 bankruptcy work for your situation.
Chapter 13 bankruptcy can offer benefits, but it also has some downsides. Here are the pros and cons to help you better understand the process and decide if it’s the right option for you:
How long does Chapter 13 bankruptcy last?
Chapter 13 bankruptcy typically lasts between 3 to 5 years, depending on your monthly income and the amount of consumer debt you have. If your monthly income is below the median for your state, the plan may last 3 years. Otherwise, it may extend to 5 years.
Can Chapter 13 bankruptcy help with consumer debt?
Yes, Chapter 13 bankruptcy is designed to help people reorganize their consumer debt, such as credit card debt, medical bills, and personal loans. You’ll repay these debts over time through a court-approved repayment plan.
What debts are included in a Chapter 13 repayment plan?
Chapter 13 bankruptcy includes both secured debts (like mortgages and car loans) and unsecured debts (like credit card debt). However, some debts like tax debts, child support, and personal injury claims are typically not included in the plan and must be handled separately.
Can Chapter 13 bankruptcy discharge all types of debts?
No, Chapter 13 bankruptcy can discharge many unsecured debts, but it does not discharge secured debts (unless they are part of a surrender agreement). Certain debts, like tax obligations or child support, cannot be discharged under the bankruptcy code.
Does Chapter 13 bankruptcy affect my property?
In Chapter 13 bankruptcy, you can usually keep your property as long as you continue making monthly payments. The court may allow you to keep your home and car by including delinquent mortgage payments or car loan payments in your repayment plan.
If you are considering Chapter 13 bankruptcy and need expert guidance, Fleysher Law Bankruptcy & Debt Attorneys is here to help. We specialize in helping individuals find the best debt relief options for their financial situation. Whether you’re struggling with consumer debt or dealing with missed payments on your mortgage, our team will work with you to understand your needs and help you file bankruptcy properly.
With our help, you can create a debt repayment plan that fits your budget and keeps your assets safe. We understand how difficult financial struggles can be, and we’re here to provide support every step of the way. Our experienced bankruptcy attorneys will ensure you understand the bankruptcy code, the process, and your options for moving forward.
Contact us today for a free consultation. Let us help you get back on track to a brighter financial future.
Emil Fleysher is a South Florida attorney dedicated to helping individuals overcome financial hardships. As the founder of the Law Office of Emil Fleysher, P.A., he specializes in bankruptcy, debt settlement, foreclosure defense, and mortgage solutions.
A graduate of Nova Southeastern University Shepard Broad Law School (2009, honors), Emil has a strong commitment to consumer rights and has volunteered over 300 hours with Legal Aid of Broward County. His firm takes a personalized, client-focused approach to debt relief, ensuring individuals understand their options and regain financial stability.
For those facing overwhelming debt or foreclosure, Emil offers free consultations to explore the best solutions.
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