Bankruptcy is a legal process that helps individuals and businesses eliminate or repay their debts under the protection of the court. Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to repay their debts over a period of three to five years.
If you are struggling with debt and considering bankruptcy, you may be wondering if you qualify for Chapter 13 bankruptcy. In this blog post, we will discuss the requirements for Chapter 13 bankruptcy and the factors that may affect your eligibility.
Bankruptcy Chapter 13: What Is It?
Chapter 13 bankruptcy is also known as a reorganization bankruptcy, as it allows debtors to reorganize their debts and pay them back over time. Unlike Chapter 7 bankruptcy, which involves liquidating assets to pay off creditors, Chapter 13 bankruptcy allows debtors to keep their property while they repay their debts.
Under Chapter 13 bankruptcy, debtors must submit a repayment plan to the court, detailing how they will repay their debts over a period of three to five years. The plan must be approved by the court and creditors before it can be implemented. Once the plan is approved and implemented, debtors must make regular payments to the bankruptcy trustee, who will distribute the payments to creditors.
Requirements for Chapter 13 Bankruptcy
To qualify for Chapter 13 bankruptcy, debtors must meet certain requirements, including:
Regular Income
Debtors must have a regular source of income, such as a job or a business, to be eligible for Chapter 13 bankruptcy. This is because Chapter 13 bankruptcy involves repaying debts over a period of time, and debtors must have the ability to make regular payments.
Debt Limitations
There are limits to the amount of debt that debtors can have in Chapter 13 bankruptcy. As of 2021, the debt limits for Chapter 13 bankruptcy are $419,275 in unsecured debt and $1,257,850 in secured debt. Unsecured debts are debts that are not backed by collateral, such as credit card debt or medical bills, while secured debts are debts that are backed by collateral, such as a mortgage or a car loan.
Priority Debts
Certain debts, such as taxes and child support, are considered priority debts in Chapter 13 bankruptcy and must be paid in full through the repayment plan. Debtors must also stay current on their ongoing priority debts, such as future tax payments and child support payments.
Eligibility for Chapter 7
Debtors must also be eligible for Chapter 7 bankruptcy, as the means test used to determine eligibility for Chapter 7 also applies to Chapter 13. The means test compares debtors’ income to the median income in their state, and if their income is above the median, they may not be eligible for Chapter 7. However, they may still qualify for Chapter 13 bankruptcy.
Factors That May Affect Eligibility for Chapter 13 Bankruptcy

While the requirements for Chapter 13 bankruptcy are straightforward, there are several factors that may affect your eligibility for this type of bankruptcy, including:
- Income: While debtors must have a regular source of income to be eligible for Chapter 13 bankruptcy, the amount of income they have may affect their eligibility. If their income is too low, they may not be able to make the required payments under the repayment plan. If their income is too high, they may not be eligible for Chapter 13 and may have to file for Chapter 7 bankruptcy instead.
- Debt Type: The type of debt that debtors have may also affect their eligibility for Chapter 13 bankruptcy. For example, if they have a large amount of secured debt, such as a mortgage or a car loan, they may not be able to make the required payments under the repayment plan. Similarly, if they have a large amount of priority debt, such as taxes or child support, they may not be able to make the required payments under the repayment plan.
- Expenses: Debtors’ expenses may also affect their eligibility for Chapter 13 bankruptcy. If their expenses are too high, they may not be able to make the required payments under the repayment plan. Conversely, if their expenses are too low, they may not be able to meet the minimum requirements for Chapter 13 bankruptcy.
- Creditors: The number and type of creditors that debtors have may also affect their eligibility for Chapter 13 bankruptcy. If they have a large number of creditors, it may be difficult to get all of them to agree to the repayment plan. Similarly, if they have creditors who are not willing to accept the repayment plan, they may not be able to qualify for Chapter 13 bankruptcy.
Benefits of Chapter 13 Bankruptcy
While Chapter 13 bankruptcy may not be the right choice for everyone, it does offer several benefits for those who qualify. Some of the benefits of Chapter 13 bankruptcy include:
- Debt Repayment: Chapter 13 bankruptcy allows debtors to repay their debts over a period of three to five years, which can make the payments more manageable and affordable.
- Property Protection: Unlike Chapter 7 bankruptcy, which may require debtors to liquidate their assets to pay off creditors, Chapter 13 bankruptcy allows debtors to keep their property while they repay their debts.
- Automatic Stay: When debtors file for Chapter 13 bankruptcy, an automatic stay is put in place, which stops creditors from taking any collection actions against them. This can provide debtors with much-needed relief from creditor harassment and collections calls.
- Credit Score Improvement: While Chapter 13 bankruptcy will appear on debtors’ credit reports for seven years, it can also help them improve their credit score over time. This is because they will be making regular payments on their debts and reducing their overall debt load.
Conclusion
If you are struggling with debt and considering bankruptcy, Chapter 13 may be a good option for you. However, it is important to understand the requirements and factors that may affect your eligibility before filing. By working with an experienced bankruptcy attorney, you can determine if Chapter 13 bankruptcy is the right choice for you and get the debt relief you need.
Frequently Askeed Questions

What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to reorganize their debts and make a plan to repay them over a period of three to five years.
Who is eligible for Chapter 13 bankruptcy?
Individuals with regular income who have unsecured debts of less than $419,275 and secured debts of less than $1,257,850 are generally eligible for Chapter 13 bankruptcy.
How does Chapter 13 bankruptcy work?
Under Chapter 13 bankruptcy, individuals make a plan to repay their debts over a period of three to five years, with payments being made to a trustee who distributes the funds to creditors.
How long does a Chapter 13 bankruptcy case last?
A Chapter 13 bankruptcy case typically lasts three to five years, depending on the terms of the repayment plan.
Will Chapter 13 bankruptcy stop foreclosure proceedings?
Yes, Chapter 13 bankruptcy can stop foreclosure proceedings and allow individuals to catch up on missed mortgage payments.
Can I include all my debts in a Chapter 13 bankruptcy?
Most debts, including credit card debt, medical bills, and personal loans, can be included in a Chapter 13 bankruptcy repayment plan.
Can I keep my property in a Chapter 13 bankruptcy?
Yes, individuals can keep their property in a Chapter 13 bankruptcy as long as they make payments on secured debts, such as a mortgage or car loan.
What happens if I miss a Chapter 13 bankruptcy payment?
If an individual misses a Chapter 13 bankruptcy payment, they may be in default and their case could be dismissed.
Can I file for Chapter 13 bankruptcy multiple times?
Yes, individuals can file for Chapter 13 bankruptcy more than once, but there are certain time limits and restrictions.
How can I find out if I qualify for Chapter 13 bankruptcy?
It’s best to consult with a bankruptcy attorney to determine if you qualify for Chapter 13 bankruptcy and to discuss the best course of action for your specific financial situation.
What is an unsecured debt?
An unsecured debt is a type of debt that is not backed by collateral. This means that if the borrower defaults on the loan or is unable to make payments, the lender cannot seize any assets to recover the money owed.
What is a secured debt?
A secured debt is a type of debt that is backed by collateral, which is an asset that a borrower pledges to a lender as security for the loan. This collateral can be a car, house, or any other valuable asset that the lender can use to recoup their losses if the borrower fails to repay the debt.
Glossary
- Bankruptcy: A legal process in which a person or business declares themselves unable to pay their debts and seeks relief from their creditors.
- Chapter 13: A specific type of bankruptcy that allows individuals to reorganize their debts and create a repayment plan over a period of three to five years.
- Qualify: To meet the requirements or standards set forth by law or policy.
- Debtor: A person or entity that owes money to another party.
- Creditor: A person or entity to whom money is owed by another party.
- Repayment plan: A detailed plan for paying off debts over a period of time, usually negotiated with creditors.
- Income: Money earned from a job or other sources.
- Expenses: The costs associated with living, such as rent, utilities, and food.
- Disposable income: The amount of income left over after paying necessary expenses.
- Priority debts: Debts that must be paid in full during a bankruptcy case, such as taxes and child support.
- Secured debts: Debts that are backed by collateral, such as a car loan or mortgage.
- Unsecured debts: Debts that are not backed by collateral, such as credit card debt or medical bills.
- Bankruptcy trustee: A court-appointed official who oversees the bankruptcy case and ensures that the debtor’s assets are distributed fairly to creditors.
- Automatic stay: A provision of bankruptcy law that prevents creditors from taking legal action against a debtor once a bankruptcy case is filed.
- Means test: A calculation used to determine whether a debtor qualifies for Chapter 7 or Chapter 13 bankruptcy based on their income and expenses.
- Exemptions: Protections that allow debtors to keep certain assets, such as a home or car, during a bankruptcy case.
- Discharge: The legal release of a debtor from their obligation to repay certain debts following a successful bankruptcy case.
- Credit counseling: A requirement for all bankruptcy filers to complete a counseling session with an approved agency prior to filing.
- Bankruptcy court: A specialized federal court that handles bankruptcy cases.
- Bankruptcy code: The set of laws and regulations that govern bankruptcy proceedings.
- Credit counseling course: A credit counseling course is a program designed to provide individuals with education and guidance on managing their finances, including debt management, budgeting, and credit repair.
- Debt management plan: A debt management plan is a program designed to assist individuals in managing their outstanding debts by negotiating with creditors to reduce interest rates and create a structured repayment plan.