We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are the Chapter 13 Bankruptcy Rules?

Autumn Rivers
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Those interested in declaring bankruptcy without giving up most of their assets often file chapter 13, which requires that a portion of the debt owed be paid off over time. This is often best for people with regular income and nonexempt property that they wish to keep, as it involves creating a payment plan that satisfies their creditors. Of course, there are strict rules in place in order to qualify for this type of bankruptcy. They include showing evidence of the ability to pay off debt monthly, taking credit counseling, and being able to prove that secured and unsecured debts are not over the maximum limit allowed for chapter 13 bankruptcy.

One of the first chapter 13 bankruptcy rules is often credit counseling. This step not only lets the debtor know what most likely comes next for their financial situation, but also lets them know if they are even eligible for this form of bankruptcy. Those eligible include individuals with jobs, and sole proprietors with regular monthly income that will allow them to pay back at least a portion of their debts every month. The chapter 13 bankruptcy rules establish specific limits for both unsecured debts, and secured debts that can vary over time.

Once eligibility is determined, the debtor must submit a petition to his or her area's bankruptcy court to show an intention to declare this type of bankruptcy. According to chapter 13 bankruptcy rules, the documents required to be submitted with this petition include a list of assets and liabilities, financial statements that show income, the names of both unsecured and secured creditors, and the total property, real estate, and debt. In addition, all monthly expenses must be added up so that the amount available to pay creditors each month can be decided.

As soon as the bankruptcy is filed in court, creditors are notified so that they will not continue to harass debtors for their money. At this point, a trustee takes over, and the debtor must submit a proposed repayment plan to him within about two weeks of filing, according to chapter 13 bankruptcy rules. The plan will need to be approved by the trustee, creditors, and court before payments can be begin, and they are usually made at least monthly for up to five years until the debt is paid off. Chapter 13 bankruptcy rules require that all monthly payments be made to the trustee, rather than to the creditors, so that he can disburse the payments among each creditor every month as agreed.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Autumn Rivers
By Autumn Rivers
Autumn Rivers, a talented writer for WiseGeek, holds a B.A. in Journalism from Arizona State University. Her background in journalism helps her create well-researched and engaging content, providing readers with valuable insights and information on a variety of subjects.
Discussion Comments
By Markerrag — On Apr 08, 2014

@Logicfest -- another good tip is to never fall behind on your Chatper 13 payments. If you can't maintain the monthly payment, it's better to visit with your attorney and revise your plan rather than get so far behind that the court dismisses your case.

Once a Chapter 13 is dismissed, the automatic stay which keeps creditors from taking direct action against you is also dismissed. That can mean trouble for a debtor as creditors find themselves free of bankruptcy rules and can pursue what is owed them.

In other words, make sure you tell your lawyer all of your expenses and income so that you can come up with a realistic monthly payment. Failing to do that on the front end will almost certainly lead to trouble.

By Logicfest — On Apr 07, 2014

One common misconception about a Chapter 13 case is that your payments can go up and you will pay off a larger portion of your unsecured debts should you get a raise, receive an inheritance during your case or otherwise find yourself in better financial shape than you were when you filed. That can be the case, but it is not always so. Quite often, someone will take advantage of improved finances by upping their plan payments and getting them over with quicker.

A good bankruptcy lawyer can tell you your options.

Autumn Rivers
Autumn Rivers
Autumn Rivers, a talented writer for WiseGeek, holds a B.A. in Journalism from Arizona State University. Her background in journalism helps her create well-researched and engaging content, providing readers with valuable insights and information on a variety of subjects.
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.