How to File for Chapter 13 Bankruptcy

1. Make sure Chapter 13 is the right choice.
Most individuals choose between Chapter 7 and Chapter 13 bankruptcy. Both have unique features that help filers solve particular problems. For instance, in a Chapter 13 bankruptcy, you can catch up on missed mortgage or auto loan payments and prevent home foreclosure or car repossession. Chapter 7 bankruptcy doesn't have a similar option. For more details, learn when Chapter 13 bankruptcy is better than Chapter 7 bankruptcy.

2. Analyze your debt.
If your debts are too high, you might not be eligible. Chapter 13 has limits on the dollar amount of debt you can owe. Also, some debts, such as newer tax debt, and mortgage and domestic support arrearages, must be paid fully in the three- to five-year repayment plan. If you don't have enough income to make the required payment, you might be unable to propose a feasible plan. Find out if you're eligible for Chapter 13 bankruptcy.

3. Value your property.
Before you file, you'll need to know how much property you own and how much of it you can protect using bankruptcy exemptions. Although you can keep all property, you must pay certain creditors an amount equal to the value of your nonexempt property. You'll factor the nonexempt property value into the amount you'll pay in the Chapter 13 bankruptcy plan.

4. Gauge your income.
Your income must cover several things: your monthly living expenses, the debts the plan must pay, and the value of the nonexempt property you plan to keep. The court won't let you proceed if you don't have enough income. Learn more about your obligations under a Chapter 13 bankruptcy plan.

5. Fill out the bankruptcy forms.
Once you've determined that you qualify, you must enter all of your financial data on official bankruptcy forms and draft your repayment plan. Learn more about completing bankruptcy forms.

6. Take the required pre-filing course.
Individuals who file for bankruptcy must take a credit counseling course before starting the case. Once complete, you'll receive a certificate you'll file with your bankruptcy paperwork. Find out more about credit counseling and debtor education requirements in bankruptcy.

7. File your forms and pay a fee.
When everything is checked and ready, it's time to file your forms, certificate, and plan with the bankruptcy court to get the process underway. You'll also pay the bankruptcy filing fee.

8. Provide the trustee with documents proving your income and other assets.
The trustee will verify the information provided in your official paperwork against bank statements, paycheck stubs, tax returns, and other things you'll produce after you file. These items are known as 521 documents and are named after the bankruptcy code section containing the financial document requirement.

9. Attend two hearings.
Within a few weeks of filing, you'll meet with the Chapter 13 bankruptcy trustee appointed to administer your case at the "341 meeting of creditors." All filers must attend a 341 meeting of creditors.

The trustee will review your identification, official forms, repayment plan, and supporting 521 documentation at the meeting. Creditors can also attend and ask questions, but they rarely do.

Shortly after this meeting, you or your attorney will attend a confirmation hearing at which the bankruptcy judge will decide whether to "confirm" or approve your plan. Beforehand, a creditor can object by filing an opposition with the court. After reviewing written objections and considering any arguments presented at the hearing, the judge will decide whether to confirm the plan. Learn more about hearings and other bankruptcy procedures.

10. Make payments.
You must start to make payments according to your repayment plan within 30 days. If you miss payments, the court will dismiss your case.

11. Take the post-filing course.
Before completing your repayment plan, you'll need to take the second required class, the "debtor education" course. You must file this certificate before the court erases any outstanding debt balances qualifying for a debt "discharge."

12. Get your bankruptcy discharge.
After completing your plan, you'll get your bankruptcy discharge. The discharge relieves you of the obligation to pay any unpaid balance on qualifying unsecured debts, although some unsecured debts, such as student loan balances, won't be discharged automatically. Learn about debts discharged at the end of a Chapter 13 case.

Congratulations will be in order once you pay the amount promised in the plan and fulfill all other requirements. You'll be done!

You can expect to follow all of these steps. However, it's common for situations to arise that will require you to return to court. For instance, if your income drops, you might be able to ask the court to reduce your Chapter 13 repayment plan amount. Or, in rare instances, the court can revoke your discharge.

Speak With a Bankruptcy Lawyer

If you're considering filing for Chapter 13, you'll want to meet with a bankruptcy lawyer. A bankruptcy attorney can explain your options, help you draft a plan the court will confirm, and guide you through any problems you encounter during your three or five-year bankruptcy plan.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.