Chapter 13

What is Chapter 13

A chapter 13 debtor is an individual with regular income. A chapter 13 bankruptcy is also called a “wage earner’s plan” and allows the debtor to keep property and pay all or part of his debts over time, usually three to five years. An individual who is self-employed or operating an unincorporated business is also eligible for chapter 13. A corporation or partnership may not be a chapter 13 debtor.

The debtor must file a plan with the court for approval and must make fixed payments to the trustee on a regular basis (usually biweekly or monthly). The plan will be for three years if the debtor’s current monthly income is less than the applicable state median, unless the court approves a longer period “for cause.” The plan generally must be for five years if the debtor’s current monthly income is greater than the applicable state median.

The debtor must file a Certificate of Credit Counseling and a copy of any debt repayment plan developed through credit counseling.

The trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to the creditors according to the terms of the plan, which may offer creditors less than full payment on their claims.

Chapter 13 offers individuals an opportunity to save their homes from foreclosure. Individuals can stop foreclosure proceedings by filing this chapter and make delinquent mortgage payments over time. However, they must continue to make all mortgage payments on time that come due during the chapter 13 plan. Filing a chapter 13 bankruptcy stops most collection actions against the debtor or the debtor’s property. 11 U.S.C. Sec. 362; however, it does not stay certain types of actions listed under 11 U.S.C. Sec. 362

When all payments have been made under the chapter 13 plan, the chapter 13 debtor is entitled to a discharge, which releases the debtor from all debts provided for by the plan or disallowed, with limited exceptions (under sec. 502). The bankruptcy law concerning the chapter 13 discharge is complex and has undergone major changes. Therefore, the debtor should consult competent legal counsel prior to filing chapter 13.


Chapter 13 Standing Trustee
Daniel B. O'Brien, III
P. O. Box 1884
Mobile, AL 36633
Phone:    (251) 438-4615

Website: Chapter 13 Home