Chapter 13 bankruptcy, also known as the Wage Earner’s Plan, is a version of bankruptcy that helps filers maintain a semblance of a normal life while managing their debts. While filing chapter 13 doesn’t erase all debts and isn’t for everyone, it can be really helpful in the right circumstances. If you’ve done your research, spoken to a bankruptcy attorney, and have determined chapter 13 is right for you, here’s how you can file.

A person in a blue button down signs chapter 13 bankruptcy paperwork

What Is Chapter 13 Bankruptcy?

Chapter 13 is a plan in which an individual pays off their debts between 3-5 years. In some instances you will pay all your debt but in most cases you only pay back a percentage of the debt – based on what you can afford. The Wage Earner’s Bankruptcy repayment plan typically must not exceed 5 years. If financial status changes within that time period, an individual may go to court to try and modify the plan. This form of bankruptcy is an ideal option for people with a higher income who are overwhelmed by creditors. Chapter 13 holds appeal for many as it provides the chance to keep one’s home or vehicle, or in certain cases, both. If you’re still deciding if this is the path you want to go down, read more about Chapter 13 bankruptcy here

When Should You File?

There are many reasons to file bankruptcy. Successfully filing has a lot to do with timing. What are some signs and reasons you should file for bankruptcy?

  • You’ve considered all alternatives to bankruptcy. (i.e. budgeting to pay bills and debts, negotiating with lenders and creditors, working with a credit counselor to pay down debts)
  • You’ve waited to file bankruptcy. ( If you’ve had a sudden decrease in income, you plan on selling your valuable assets yourself, or a large future debt is expected, waiting a few months to file is helpful). 
  • You’re overwhelmed by creditors and have already looked into the FDCPA.  

If you’ve explored and gone through these steps, and still have reason to consider bankruptcy, it might be time to file. After doing your research and speaking to a bankruptcy attorney, and you have both determined chapter 13 is right for you, here’s how you can file.

Filing Chapter 13 Bankruptcy

The first step in filing chapter 13 is to speak with a bankruptcy attorney. Mark Schottler and his associates offer free 30 minute consultations to clients considering bankruptcy. Set your consultation up here. Speaking with an experienced bankruptcy attorney can help you weigh your pros and cons of filing, and can help you make the right decision for your situation. 

When working with an attorney, you will pull together resources to prove your eligibility and to present this evidence to a judge. You will also work with your attorney and credit counselor to put together a repayment plan that the judge can approve or edit that will last 3-5 years depending on your debt and income ratio. As mentioned previously, if you have a significant change in income during these 3-5 years, you can work with your attorney and the courts to get a modification to the plan. The goal of chapter 13 is to pay off debts, however it can result in some debts being forgiven. 

An attorney in a white polka dot shirt helps a client in a white button down file for chapter 13 bankruptcy

To file, your attorney will walk you through filling out the proper documents and paperwork for bankruptcy. You will outline your income, your debts, your assets and your monthly expenses among other things. Your attorney will then help you submit these forms also known as a bankruptcy petition. You have 14 days after the submission to submit the repayment plan you created with your counselor and attorney, and you have 30 days to start paying off those debts according to the plan whether your petition has been approved or not. 

If you have more questions about filing chapter 13 bankruptcy and live in Chicago and surrounding areas, contact Schottler & Associates here

Mark Schottler is a Chicagoland attorney with over 20 years of experience working both in probate and estate planning law and in real estate law. He puts his extensive knowledge on these subjects into easily consumable articles that will help and advise the public. Mark Schottler has a passion for probate and uses this to create relevant articles that are informative and entertaining. *While these posts may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.