Chapter 13 Bankruptcy - Wage Earner Plan Guide

What is Chapter 13 Bankruptcy?

• Chapter 13 bankruptcy allows individuals with regular income to develop a plan to repay all or part of their debts over 3-5 years.
• This option helps protect valuable assets like homes while restructuring debt payments.
• Chapter 13 is ideal for people who want to keep their home and have sufficient income to make monthly plan payments.

Chapter 13 Eligibility Requirements

• Must have regular income sufficient to make plan payments
• Unsecured debt cannot exceed $419,275 (2022 limits)
• Secured debt cannot exceed $1,257,850 (2022 limits)
• Must be current on recent tax filings
• Must complete credit counseling within 180 days before filing

Chapter 13 Plan Development

• Propose 3-5 year repayment plan based on disposable income
• Priority debts must be paid in full (taxes, child support)
• Secured debts: catch up on mortgage/car payments
• Unsecured debts: pay percentage based on available income
• Plan must pass good faith and best interests tests

Chapter 13 Benefits

• Keep your home and avoid foreclosure
• Catch up on mortgage payments over time
• Reduce some secured debt to asset value
• Stop wage garnishments and collection actions
• Potential discharge of remaining unsecured debt after completion