What is Chapter 13 Bankruptcy?

Often people have the idea that they would prefer to file for bankruptcy and have all of their debt wiped out (this is Chapter 7 bankruptcy), but not everyone qualifies. Those with significant income or wanting to keep their non-exempt property may need to turn to Chapter 13 bankruptcy.

Chapter 13 Bankruptcy is also known as ‘wage earner’s plan’ or reorganization bankruptcy and allows you the chance to keep property if you successfully complete the court-organized repayment plan over a 3 to 5 year period.

Usually Chapter 13 is right for you if you make too much income to pass the Chapter 7 means test, or if you have a house or car that you want to keep, and you earn enough that repayment plan can help you avoid wage garnishment and other collection tactics. Black and White Law Firm, PLLC can help you walk through the process and determine which type of bankruptcy is right for your situation.

Chapter 13 may be a good option for you if you find yourself in these situations:

  • Behind on Mortgage and Facing Foreclosure
  • Behind on Payments & Facing Repossession of a Car
  • Behind on Child Support
  • Facing High Tax Debt


Will I Need to Repay All of My Debts in Chapter 13 Bankruptcy?

Repayment doesn’t necessarily mean that you will need to repay all of the debt. The amount you will repay is dependent on factors such as yearly income, household size and expenses, as well as the number of claims filed against you.

With a Chapter 13 filing, your unsecured debts, that is debt that is not backed by collateral, (such as medical and credit card bills) may be discharged. This means that you won’t have to pay them.

Other debt, such as secured debt (debt that is backed by collateral such as a mortgage or car loan), or child support, tax debt or student loans, may not be wiped out. These loans may be reduced and subject to a court-approved repayment plan that decreases the amount you owe and allows you to repay at least a portion of the debt.

What is the Process for Chapter 13 Bankruptcy?

  1. You will not be required to face this alone, but knowing what is coming can help lessen the stress of the situation.
  2. Contact a local bankruptcy attorney who can help you determine the path that is right for you and your debt situation. Black and White Law Firm, PC CONTACT LINK.
  3. Gather all of the necessary information and bring it to the meeting with your bankruptcy lawyer. Be completely truthful with your attorney. This will help expedite the process and enable us to give you the best advice.
           Gather the following documents:
    • The last two years of income tax returns, including W-2, 1099’s, and K-1 information
    • Any Deeds to real estate you own
    • Your vehicle titles
    • Loan documents
    • Create a list of all creditors, including addresses, and the amounts and description of each debt
    • Your most recent bill from each of your creditors
    • Any collection letters you’ve received
    • Copies of all pay stubs for the last 6 months showing the amount and frequency of your income; if self-employed, a monthly profit-and-loss statements for the past six months
    • Notices of foreclosure on your home, utility shut off, or vehicle or property repossession
    • Any court documents you’ve been served
  1. You will sign the documents provided by your attorney that includes the plans and schedules and your attorney will file the case. Expect to pay the court filing fee at that time. The court filing fee for a 13 is $313.00.
  2. Your monthly Chapter 13 payments will begin the month after you file even though the court will not have confirmed your proposed ‘repayment’ plan. This is to ensure that your Chapter 13 bankruptcy case will stay on course and start you on the repayment schedule right away.
  3. Scheduled before your hearing, you will attend a meeting of creditors with your attorney at the Chapter 13 Trustee’s office. At this meeting, the trustee will look over your documents and ask questions about the bankruptcy filing.
  4. Your creditors and the Chapter 13 Trustee have the opportunity to object to the proposed repayment plan. If this does happen, your attorney will work to make changes to satisfy each party. Once all objections have been resolved the Chapter 13 Plan will be confirmed by the bankruptcy court.
  5. You will complete your confirmed Chapter 13 Plan. The court will order a debt discharge which wipes out the remaining balance of your qualified debt once you have made all payments and are current on your debt obligations such as child support. You will probably be required to complete the Debtor’s Education Course as a requirement for the debt discharge.

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