Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is also called “wage earner bankruptcy” and “repayment plan bankruptcy.”  Chapter 13 usually involves submission of a 3 to 5 year repayment plan where you pay certain debts and discharge (eliminate) other debts.  We can help prepare all the necessary Chapter 13 bankruptcy forms.  Payments can be deducted from a paycheck or mailed to the Chapter 13 Trustee.  At the end of the repayment plan, you receive a discharge that eliminates remaining debt, with some exceptions for special types of debts.  Ideally, the Chapter 13 plan has paid off car loans, taxes, and caught up mortgage payments, and the discharge eliminates the rest of the debt.

If Chapter 13 takes 3 to 5 years to receive a discharge, but Chapter 7 only takes 4 months, a common question is Why file a Chapter 13?  The decision to file Chapter 7 or Chapter 13 can be a difficult one, but here is a list of some key factors that would encourage filing a Chapter 13 bankruptcy:

  • You are behind on mortgage payments or facing foreclosure on a house you want to keep
  • You want to restructure your car loan on affordable payments
  • You have excess property that could be at risk in a Chapter 7
  • You do not pass the Chapter 7 means test due to your income
  • You have unpaid taxes and want an affordable way to repay them without incurring additional penalties and interest
  • You have a second mortgage you would like to eliminate
  • You have certain debts that can only be eliminated in Chapter 13

We prepare all of the necessary paper to file a Chapter 13.  About 4 to 6 weeks after filing, there is a short meeting with the Trustee, who will review the information in your paperwork.  Later on, there is a confirmation hearing where we meet with the Trustee to seek approval of your Chapter 13 plan.  Usually we do not need our clients to attend the confirmation hearing.  Once the plan is approved by the court, the client must continue making payments to complete the plan and receive a discharge.