Chapter 13 Bankruptcy



  • The second most common form of bankruptcy filed by individuals and married couples.
  • Businesses cannot file for Chapter 13 bankruptcy unless they are operated as sole proprietorship’s.
  • Debtors in Chapter 13 bankruptcies make monthly payments which are used to pay their creditors.
  • A standing trustee is appointed to each Chapter 13 case.    The standing Chapter 13 trustee is assigned based upon the Judge appointed to the case.   The standing Chapter 13 trustee collects the Debtor’s payments, participates in the Debtor’s case to make sure that the requirements are met and pays the Debtor’s creditors in accordance with a confirmed plan.
  • There are requirements that the Debts not exceed certain amounts in a Chapter 13.
  • Where specific requirements are met, Debtors can adjust the rights of secured creditors.  In some instances Debtors may be required to make payments to their unsecured creditors usually due to income or in order to retain assets in addition to those that can be protected by exemptions.
  • The Debtor files a plan.   The options available are relatively simple.
  •   A plan last from three to five years.   All Chapter 13 Debtors can have up to 5 years to complete their plan.   Some Debtors are required to pay for five years based upon their income.
  • Creditors are expected to receive at least as much as they would receive in a Chapter 7 case.
  • A Debtor is typically permitted to retain control over such assets as businesses, funds they are owed and lawsuits the debtor has filed against others or has the right to file against others. Such assets are considered in determining what a Debtor is required to pay and Debtors may be required to give some or all of the proceeds of lawsuits to the trustee for the payment of creditors.
  • The Debtor may be able to retain tax refunds, depending on the terms of the plan as confirmed.   The Debtor retains the option to request the ability to retain the tax refund if the circumstances make it appropriate.
  • There is some flexibility to request adjustments for changes in circumstances.
  • A creditor can object to the Debtor’s plan based only on its failure to meet the requirements for confirmation of the plan.
  • A Chapter 13 plan can be dismissed but the Debtor or the Court and can be converted to a different Chapter where appropriate.
  • The attorneys fees for a Chapter 13 are higher that Chapter 7 but a portion can be paid in the Debtor’s Chapter 13 plan.   The filing fee is $281.00.