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Chapter 13 bankruptcy basics

On Behalf of | Feb 4, 2022 | Bankruptcy Law

Chapter 13 bankruptcy is also known as a wage earner’s plan because it helps you develop a repayment plan for your debt if you have a regular income. Your bankruptcy can last between three and five years depending on your income, and creditors are legally forbidden from collecting funds from you in a conventional manner. If you’re a Pennsylvania resident and have questions about Chapter 13 bankruptcy, here are some important points to keep in mind.

Benefits of Chapter 13

When you choose Chapter 13 bankruptcy, you may be able to save your home from foreclosure and get rid of late mortgage payments over time. This is not usually the case if you select the liquidation option that comes with Chapter 7 bankruptcy.

Chapter 13 also allows you to reschedule your secured debt repayments and extend them over the time you’re under the Chapter 13 bankruptcy plan. Once you’ve filed Chapter 13, you’ll essentially enter a debt consolidation loan plan, so you’ll have to make payments to a Chapter 13 trustee. The trustee will distribute your monthly payments to your specific creditors. You won’t have any direct communication with your creditors while you’re protected by Chapter 13.


Anyone, even if an individual is operating an unincorporated company or is self-employed, can file for Chapter 13 bankruptcy. However, your unsecured debt has to be less than $394,825, and your secure debt must be less than $1,184,200 according to 11 U.S.C. section 109(e). These amounts are adjusted regularly to reflect the changes in the consumer price index.

An individual is prohibited from filing Chapter 13 if their previous bankruptcy petition was dismissed within the last 180 days. There are some regulations to know about, but once you have an understanding of how the process works, you can begin getting a handle on your debts.



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