Can Chapter 13 Bankruptcy Be Denied? Eligibility and Plan Tests

Yes, a Chapter 13 bankruptcy can be denied, and it can happen at three different stages. Some people are blocked before they file because they don’t meet the eligibility requirements. Others file successfully but see their repayment plan rejected at the confirmation hearing. And some make it past confirmation only to have their case dismissed later for missing payments or failing to meet ongoing obligations.

Eligibility Problems That Block You Before Filing

Chapter 13 is only available to individuals with “regular income,” meaning income stable enough to fund a repayment plan lasting three to five years. That income doesn’t have to come from a traditional job. Wages, self-employment earnings, commissions, pensions, and Social Security benefits all count.¹ If your income is too irregular or too low to support any meaningful repayment plan, the court won’t let you proceed.

Your debt must also fall within statutory limits. As of April 1, 2025, you need less than $526,700 in noncontingent, liquidated unsecured debt and less than $1,580,125 in noncontingent, liquidated secured debt.² “Noncontingent” means the debt doesn’t depend on some future event, and “liquidated” means the amount owed is fixed and certain. Exceed either cap and Chapter 13 is off the table.

Before filing, you must also complete a credit counseling briefing from an approved nonprofit agency within 180 days of your filing date.³ The court can waive this in limited circumstances, such as when approved agencies can’t meet demand in your district or when a disability prevents completing the course. Absent one of those narrow exceptions, filing without the certificate gets your case dismissed.

The Four Tests Your Repayment Plan Must Pass

Filing the petition is only the first step. The court must also confirm your proposed repayment plan, and four separate legal tests stand between you and confirmation. Failing any one is enough to sink the plan.

Good Faith

The plan must be proposed in good faith.⁴ Courts look at the totality of your circumstances. If you ran up credit card debt right before filing, manipulated your income to minimize payments, or structured the plan to pay almost nothing to creditors when you clearly could afford more, that reads as bad faith. The trustee is watching for this, and creditors can object on the same grounds.

Feasibility

The court must find that you can actually make every payment your plan promises.⁴ The math has to work: your income minus necessary living expenses must leave enough to cover the plan payment each month, consistently, for the full three to five years. A plan that depends on overtime that isn’t guaranteed, or that leaves no cushion for unexpected expenses, is likely to be rejected as infeasible.

Best Interest of Creditors

Unsecured creditors must receive at least as much under your Chapter 13 plan as they would have gotten if you had filed Chapter 7 and your non-exempt assets had been liquidated.⁴ The court values your non-exempt property, then checks whether your plan pays unsecured creditors at least that amount over its life. Significant non-exempt assets paired with a plan that pays unsecured creditors very little will fail this test.

Disposable Income

If the trustee or any unsecured creditor objects, you must commit all of your projected disposable income to the plan for the “applicable commitment period.” Disposable income is your current monthly income minus amounts reasonably necessary for your support and the support of your dependents.⁴ Whether the commitment period is three or five years depends on how your income compares to the median for your state and household size. Above the median, your plan generally must last five years. Below the median, three years is the baseline, though the court can approve a longer plan for cause.¹

One boundary that catches homeowners off guard: you generally cannot modify the terms of a mortgage secured only by your primary residence. You can catch up on missed payments through the plan, but the underlying loan terms stay the same.

Duties That Can Get Your Case Dismissed

Chapter 13 demands active participation. Miss a deadline or skip a required step and the court has grounds to dismiss even a case that would otherwise be fine.

You must file your repayment plan either with your petition or within 14 days after filing. Extensions are only granted for cause.⁵ Missing that deadline without court approval is grounds for dismissal.

You must attend the Meeting of Creditors, sometimes called the 341 meeting. No judge presides. The bankruptcy trustee runs the meeting and questions you under oath about your finances and your proposed plan.⁶ Creditors can attend and ask questions too. If you’re filing jointly with a spouse, both of you must appear. Skipping this meeting is one of the fastest ways to get your case thrown out.

You must also have filed all required federal, state, and local tax returns before the court will confirm your plan.⁴ The Bankruptcy Code requires compliance with the tax filing obligations in 11 U.S.C. § 1308, covering the four tax years preceding your bankruptcy. Missing returns block confirmation, and the trustee will likely move to dismiss.

And before receiving your discharge at the end of the plan, you must complete a financial management education course from an approved provider. This is separate from the pre-filing credit counseling requirement.⁷ No certificate, no discharge.

What Causes Cases to Fail After Confirmation

Getting your plan confirmed doesn’t mean you’re safe. The court can dismiss or convert your case any time during the three-to-five-year repayment period, and the trustee or any creditor can file the motion. The statute lists nearly a dozen specific grounds.⁸

The most common problems that lead to post-confirmation dismissal:

Failing to make plan payments on time. This is the single biggest reason Chapter 13 cases fail. Fall behind and the trustee will notice quickly.
Material default on a plan term, such as missing a direct mortgage payment that your plan requires you to maintain.
Unreasonable delay that hurts creditors, like dragging your feet on documents or trustee inquiries.
Failing to pay post-filing domestic support obligations. Child support or alimony that comes due after your filing date must be paid.
Not paying required court fees.

The court weighs whether dismissal or conversion to Chapter 7 better serves creditors. When a debtor simply can’t keep up, dismissal is often the outcome.

Hiding Assets or Misleading the Court

Bankruptcy requires complete honesty. Every asset, every income source, every debt, and every recent financial transaction must be disclosed. Hide assets, underreport income, or make false statements on your paperwork and the consequences go well beyond dismissal.

The court can deny your discharge entirely, meaning you complete the process but still owe everything. If fraud comes to light after a discharge has already been granted, the trustee can move to revoke it. Bankruptcy fraud is also a federal crime carrying fines up to $500,000 and up to five years in prison. Trustees and courts are experienced at spotting discrepancies.

How Prior Bankruptcies Affect a New Filing

Previous bankruptcies create two problems: they can block your discharge, and they can weaken or eliminate the automatic stay in your new case.

Discharge Waiting Periods

If you received a discharge in a Chapter 7, 11, or 12 case, you must wait four years from the date of that prior filing before you can receive a discharge in a new Chapter 13. If the prior discharge came from another Chapter 13, the waiting period is two years.⁷ You can technically file during these waiting periods, but without a discharge at the end, the primary benefit of bankruptcy is gone.

Automatic Stay Limitations

The automatic stay forces creditors to stop collection calls, lawsuits, wage garnishments, and foreclosure proceedings the moment you file. But if you had a bankruptcy case pending within the past year that was dismissed, the stay in your new case only lasts 30 days unless you convince the court to extend it.⁹ To extend it, you must file a motion and show the new case was filed in good faith. The hearing has to happen before the 30-day window closes.

If two or more previous cases were pending and dismissed within the past year, the automatic stay doesn’t take effect at all when you file the new case. You would have to ask the court to impose it, and the presumption runs against you.⁹ Overcoming the presumption of bad faith requires clear and convincing evidence that your circumstances have genuinely changed.

What Happens When a Case Is Dismissed

When a Chapter 13 case is dismissed, the court essentially treats it as though the bankruptcy never happened. The automatic stay lifts immediately and creditors regain their full collection rights. Collection calls resume, lawsuits proceed, wage garnishments restart, and any pending foreclosure picks up where it left off.

Penalties and interest that were frozen during your bankruptcy may be reimposed and backdated. If you were three years into a five-year plan when dismissal came, none of the payments you made through the trustee get refunded, though they were distributed to creditors and reduced your outstanding balances accordingly.

There is no mandatory waiting period before refiling unless the court specifically imposes a bar on refiling as part of the dismissal order. Filing a new case within one year of a dismissal, however, severely limits the automatic stay in the new case.⁹

Options If Your Plan Is in Trouble

If you’re struggling but haven’t been dismissed yet, you have options.

Modifying Your Plan

You, the trustee, or an unsecured creditor can request a plan modification any time after confirmation but before payments are completed. Modifications can raise or lower payments, extend or shorten the timeline, or adjust distributions to specific creditors.¹⁰ If you’ve lost a job, had a medical emergency, or experienced another significant change, asking for a modification before you fall behind is almost always better than waiting for a motion to dismiss.

Converting to Chapter 7

You have the right to convert to Chapter 7 as long as you’re eligible. The main hurdle is the means test. Even if you couldn’t pass it when you originally filed under Chapter 13, a job loss or other change may make you eligible now. Chapter 7 works differently: a trustee liquidates non-exempt assets to pay creditors, and qualifying debts are discharged relatively quickly. You lose the ability to catch up on a mortgage or car loan through a structured plan, but you may get a faster fresh start. One limit: if you received a Chapter 7 discharge within the past eight years, you can’t get another one by converting.

1
United States Courts. Chapter 13 Bankruptcy Basics
2
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
3
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
4
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
5
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 3015 – Chapter 12 or 13 Time to File a Plan
6
United States Department of Justice. Section 341 Meeting of Creditors
7
Office of the Law Revision Counsel. 11 USC 1328 – Discharge
8
Office of the Law Revision Counsel. 11 USC 1307 – Conversion or Dismissal
9
Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
10
Office of the Law Revision Counsel. 11 USC 1329 – Modification of Plan After Confirmation