Chapter 13


A Chapter 13  is a debt repayment plan that consolidates all of your monthly bills. You pay one monthly payment to a court appointed trustee. The trustee disburses payments to the creditors based on the provisions of your plan. Only individuals with regular income may file Chapter 13 cases. Chapter 13 Plans must commit all of your net disposable income for at least 3 years however, most plans run for 5 years. 

Upon the filing of a Chapter 13 bankruptcy petition, the court issues an Automatic Stay preventing creditors from harassing you or taking any actions against you such as wage garnishments, lawsuits, foreclosures and repossessions. A Chapter 13 Plan can consolidate all of your debts, including real estate arrearages, automobile payments, past-due taxes, student loans and past-due support obligations.

The monthly plan payment is determined by your income, your monthly living expenses and the amount of debt that is to be paid back within the five year plan. In many cases, if you cannot pay all of your debts, a plan can be proposed to repay your unsecured creditors less than the total amount owed.


Because there are so many factors related to income, living expenses and debt to be repaid, every case is different and should be carefully reviewed by a qualified attorney. Most taxes, child support and student loans must be paid in full during the 5 year plan period. Your plan payment must be at least as much as your monthly net disposable income, which is defined as the amount of money remaining after you pay all of your living expenses (excluding your debts).

About a week after your Chapter 13 case is filed, you will receive a notice informing you of the first meeting of creditors. All creditors receive the same notice with the date and time of the hearing however, most do not appear. The hearing takes place about six weeks after your case is filed by a court appointed trustee. The trustee wants to verify your ability to make plan payments. The purpose of the hearing is to allow creditors and the trustee to ask questions about your debts, assets, income and the proposed Chapter 13 Plan.  Your first plan payment is due thirty days after your Plan is filed (prior to the hearing). 

In some cases, a creditor will object to the Chapter 13 Plan. If a creditor does object, the case will then be set for a hearing before a Bankruptcy Judge to review your case. If your Chapter 13 Plan complies with the law and you have made all of your Plan payments, the judge will normally approve your plan despite the creditor objection. An attorney will be present with you at all hearings. When your Chapter 13 Plan has been approved, the trustee will begin paying the creditors the amounts called for in the plan. It is the responsibility of the creditors to file a claim and prove the amount owed to them. The trustee will only pay creditors who file claims within the time allowed. The debt to any unsecured creditor who fails to file a timely claim will be discharged, provided you complete the Chapter 13 plan.

At the conclusion of your Chapter 13 Plan (no more than 5 years after the petition was filed), the Court will issue a Discharge. With the Discharge, your debts are considered either paid or cancelled. Creditors in your plan are forbidden from collecting any more money from you.