Experienced Chapter 13 Lawyers at The Sicuranza Law Firm, LLC

Many believe that filing for bankruptcy is the last resort on a road to financial disaster, the only choice left when debt repayment appears unachievable. Nevertheless, there is still hope in bankruptcy, and the closest thing to a soft landing is provided under


For good reason, Chapter 13 is commonly referred to as the Wage Earner’s Bankruptcy. For those who are employed but have fallen far behind on their credit card payments, Chapter 13 bankruptcy may be an option.
A payment plan is established and your debts are rearranged. As long as you follow the guidelines of the repayment plan that the bankruptcy court establishes, you ought to be able to maintain your house following Chapter 13 bankruptcy.
You have three to five years under Chapter 13 to pay off debt and devote all of your disposable income to debt reduction. That entails living simply, but you can pay off unsecured debt, like as credit card debt, while making mortgage payments by using


A trustee designated by the court will oversee you and handle payment collection and distribution.  In other words, Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes  payments to creditors. Individuals will have no direct contact with  creditors while under chapter 13 protection.


You have to file a reorganization plan, which usually asks for the forgiveness of other debts and protects some assets (like your home) from foreclosure or seizure.
This contrasts with the more drastic Chapter 7 petition, which involves the sale of non-exempt assets.
No bankruptcy filing—Chapter 13, Chapter 7, or Chapter 11—eliminates all debts. Not only are most taxes and student loans non-dischargeable, but also alimony and child support payments. Bankruptcy, however, can discharge a lot of other debts, though it will probably make it more difficult for you to get loans in the future.

• Have a consistent source of income in order to be eligible for Chapter 13.

• Did not file for Chapter 7 or Chapter 13 bankruptcy for a period of two or four years, respectively.

• Make sure you file your taxes on time.

• Your secured debt cannot exceed $1,257,850, and your unsecured debt cannot exceed $419,275.

Periodically, these numbers are updated to reflect variations in the consumer price index.
The filing of a Chapter 13 petition halts ongoing foreclosure proceedings and the payment of any outstanding obligations. This does not pay off the debt; rather, it protects you from creditors while the court reviews the plan. With any luck, the bankruptcy plan will release enough of your income to enable you to continue making regular mortgage payments and to maintain your residence. Find Out More:


In essence, Chapter 13 provides you some time to organize your finances. It prolongs the period of time after the bankruptcy court’s decision that you have to pay back what you owe.
Chapter 13 shields your cosigners on loans from collection attempts in the event that the bankruptcy settlement requires you to pay back the debt. Chapter 13 has a two-year waiting period, but Chapter 7 has an eight-year waiting period, if you need to file for bankruptcy a second time.
After filing for Chapter 7 bankruptcy, you can also apply for Chapter 13 bankruptcy, which enables you to request a reduction in any debt that remains after a Chapter 7 discharge.


Locate a bankruptcy attorney first, and ask them to provide you with a free assessment and an idea of the filing costs.
A $313 filing fee and legal fees are the only expenses associated with filing for Chapter 13 bankruptcy. Regarding records and further data, you have to supply:

• A list of creditors along with the total amount owed to them.

• Evidence of income.

• List your monthly living costs; • List any properties you own; • List any leases in your name.

• Specify your federal tax return and any claims of unpaid taxes when providing tax information.

Petitioners for Chapter 13 cannot have had a bankruptcy discharged during the 180 days prior to filing. During those 180 days, they also have to complete a credit counseling program authorized by the U.S. Department of Justice U.S. Trustee Program.
The court clerk will send you a letter informing you, your creditors, and your court-appointed trustee that collection efforts on your accounts have been halted when you (or your attorney) file your paperwork. That implies that you must cease being harassed by creditors for payments.
A hearing will be held by a bankruptcy judge or administrator to assess whether the repayment plan you have proposed is reasonable and complies with legal requirements. Although creditors may protest, most judges permit filers to make many changes to their plans.
Delinquent payments are forgiven over time, but following bankruptcy, you will be required to make all subsequent mortgage payments on schedule. It’s not necessary for you to communicate directly with creditors; instead, you can arrange for the payments to be distributed through your trustee.
It’s merely a matter of adhering to your payback schedule after that. The trustee may seek to have your Chapter 13 case dismissed if you fail to make payments on time or at all. It’s not what you want.
You might be able to seek an early discharge from the agreement and expedite your payments in particular circumstances. On the other hand, you must notify the chapter 13 bankruptcy trustee and request a plan modification if your financial condition deteriorates.
If you don’t follow the rules, particularly if you don’t make your payments on time, your Chapter 13 case may be dismissed.


Chapter 13 is not intended for corporations or LLCs, but rather for private persons. Even if their debts are personal, stockbrokers and commodity brokers are also ineligible to file.
People have to demonstrate that they are able to afford the monthly fees. Within 14 days of filing a petition, they must reveal their sources of income and turn the material in to the court. Pension income, Social Security benefits, unemployment insurance, royalties, rent, and the earnings from the sale of real estate are just a few examples of the many different sources of income.
Additionally, you must file your taxes on time. You must provide documentation that you have submitted your federal and state taxes for the previous four years. If you are unable to accomplish this, your case will be dismissed if transcripts of your returns cannot be produced, and it may be postponed until you are able to.
After examining the revenue and debt data, the trustee will call a hearing to determine whether the plan is acceptable. The Chapter 13 lawsuit will be dismissed after the repayments are finished. Usually, this requires three to five years.


In order to get an an idea as to how an applicant for Chapter 13 bankruptcy can succeed, let’s look at the following example:
Think about Jack and Jill, a married couple who have a $150,000 mortgage on their house. Although Jack and Jill doesn’t, they jointly apply for Chapter 13 protection. In addition, the pair has roughly $20,000 in credit card debt and a $7,000 auto loan balance.
They submit a Chapter 13 repayment plan, which outlines how Jack’s income can be used to pay off portion of his unsecured credit card debt as well as mortgage and auto payments, two weeks after filing the petition. Three types of debt are included in their plan: priority, secured, and unsecured.
Priority claims need to be settled in full. They consist of child support, some taxes, and the cost of filing for bankruptcy. Most of the time, full payment is also required for secured debts, such as those secured by a car or house.
Credit card debt and other unsecured debt are negotiable. The judge will determine how much you owe your unsecured creditors after looking over your income and repayment schedule. During the proceedings, avoid placing your feet on the judge’s desk as the range is from “everything” to “nothing.”
Jack and Jill were required to pay back their overdue taxes and court expenses. They needed to pay their automobile and mortgage on time. Their credit card debt was partially dismissed by the judge.
Following that, the couple started paying their trustee, who disbursed the funds to creditors and kept tabs on Jack and Jill’s development.

The CARES Act and Chapter 13

The CARES Act enabled businesses and people impacted by the pandemic to file for bankruptcy, while the federal government released a variety of Covid-19 relief packages.
Repayment schedules were extended to seven years, among other things. Since the bill’s signing in March 2020, some provisions have come to an end. Any clauses that are still applicable should be able to be applied by your bankruptcy attorney.

Bankruptcy under Chapter 7 vs. Chapter 13

You get your chance to retain everything in Chapter 13. The majority of your “necessary” belongings—such as your house, vehicle used to commute to work, clothing, and work tools—are likely free from bankruptcy under Chapter 7, but you will have to liquidate anything that a trustee determines to be “non-exempt.”
Though it’s not quite that easy, that’s the short answer.
Chapter 7 requires you to sell all or part of your non-exempt possessions, including valuable items like art, coin, stamp, and card collections, as well as any property you may hold. After filing, the procedure is finished in six months. With the exception of inheritances, any income or property you obtain after filing is not liable to be distributed to creditors.
Chapter 7 allows other obligations, including mortgage liens, to be collected after the case is over, and temporarily halts the foreclosure process for lenders who have already filed to foreclose on your property. Those who cosign your loans are nonetheless accountable for payment.
According to Chapter 7, you either have to pass a means test or have an income that is less than the state’s median level. In contrast, Chapter 13 is an alternative if you don’t meet the means test or Chapter 7 income limit rules.

Bankruptcy under Chapters 11 and 13

Another bankruptcy type is Chapter 11. Although small firms and individuals are eligible, it was initially intended for huge organizations since it resembles Chapter 13 in that debt is restructured and paid back over time.
Most debtors opt for Chapter 13 or Chapter 7 bankruptcy instead of Chapter 11 because it is less time-consuming, costly, and risky. Chapter 11 bankruptcy can become convoluted and expensive. However, it’s a good choice if you have too much debt to be eligible for Chapter 13 or if you don’t want to sell your assets as required by Chapter 7.

After Chapter 13 Bankruptcy: Life After

For those with significant debts who fear losing their homes to bankruptcy, Chapter 13 may be helpful. You can restart your financial life if you follow your repayment plan.
Secured obligations will be paid off, but auto and mortgage payments may still be due. With any luck, you’ll have formed the behaviors required to fulfill those commitments.

What Impact Does Bankruptcy Have on Your Credit?

Although the negative effects of filing for bankruptcy do eventually fade, it will still have an impact on your credit score for as long as it is listed on your credit report. Chapter 7 bankruptcy remains on file for ten years, whereas Chapter 13 bankruptcy remains on file for seven. Assuming no financial setbacks occur during this time, your credit score should gradually improve.
Chapter 13 is less devastating as well as, provided you follow your repayment plan, you will have at least a history of on-time bill payment.
Most likely, if you’re declaring bankruptcy, your credit score wasn’t great to start with. Regardless of the chapter you use, it will lose 100–200 points if it was good (possibly more).
Although filing for bankruptcy can help you get out of debt, you should only use it as a last resort. Before determining whether to file for bankruptcy, consider other options or suggestions that might be a less harmful course of action. Among the options are:

Credit Counseling: Free budgeting guidance and recommendations for additional debt-relief programs are offered by nonprofit credit counseling organizations. Churches, nonprofits, and government groups all offer free counseling, or they can direct you to another resource for assistance. Reviewing your finances and making recommendations for debt relief are the objectives. In addition, there is a second financial management course requirement with a deadline to file the course certificate before the filer makes the last Chapter 13 repayment plan payment. 

One of the few debt-relief services that could help people avoid declaring bankruptcy is debt management. Reducing the interest rate on your credit card debt and bringing down your monthly payments to a manageable level are the main objectives of debt management. Plans for managing debt take three to five years to finish.

Debt Consolidation: If you have balances on several credit cards, you can pay them all off with a debt consolidation loan, leaving you with a smaller loan repayment. Whether or not the interest rate you pay gives significant savings will depend on your credit score.

Debt settlement is generally not significantly worse than bankruptcy. A debt settlement organization offers you a lump-sum payment plan that you must adhere to for two to three years in exchange for your creditors reducing the amount you owe. This is a risky debt relief option due to a number of drawbacks, but if it keeps you out of bankruptcy, it might be worthwhile, depending on your situation.