A Chapter 13 bankruptcy repayment plan is a court-supervised schedule that consolidates your debts into a single monthly payment to a trustee for three or five years, pays priority and secured creditors in full, sends whatever disposable income remains to unsecured creditors, and discharges most of the leftover unsecured balance when you make the final payment. Filing freezes collection activity immediately, and the plan lets you catch up on a mortgage or car loan while keeping the property. The tradeoff is years of tight budgeting under the trustee’s eye and paperwork that has to be exact.
Who Can File
Chapter 13 is for individuals with regular income. The bankruptcy code reads “regular” broadly enough to include wages, self-employment, Social Security, and pension payments, but the income has to be steady enough to fund monthly plan payments. If it isn’t, the court won’t confirm a plan no matter how the paperwork looks.
There are two separate debt caps, and busting either one disqualifies you. As of the Judicial Conference adjustment effective April 1, 2025, your noncontingent, liquidated unsecured debts must be under $526,700, and your noncontingent, liquidated secured debts must be under $1,580,125.1Office of the Law Revision Counsel. 11 U.S.C. 109 – Who May Be a Debtor “Noncontingent” means the debt doesn’t hinge on a future event; “liquidated” means the amount can be readily calculated. Disputed debts and pending lawsuit exposure generally don’t count against the caps.
You also can’t file if a prior bankruptcy case was dismissed within the last 180 days for willfully disobeying court orders or for a voluntary dismissal after a creditor sought stay relief.1Office of the Law Revision Counsel. 11 U.S.C. 109 – Who May Be a Debtor Before filing, you have to complete a credit counseling briefing from a U.S. Trustee–approved nonprofit within the prior 180 days, by phone or online. Without the certificate, the court dismisses the petition.
Chapter 13 is not for businesses. A business entity looking for reorganization uses a different chapter.
How the Plan Is Built
Every plan sorts debts into three buckets that decide who gets paid, in what order, and how much.
Priority Debts
Priority debts must be paid in full over the life of the plan. These include past-due child support, alimony, and most recent tax debts.2Office of the Law Revision Counsel. 11 U.S.C. 1322 – Contents of Plan A priority creditor can agree to less, but without that agreement the plan has to cover the full amount or the court won’t confirm it.
Secured Debts
Secured debts are tied to specific collateral like a house or car. The plan lets you cure mortgage arrears over its life while keeping up regular payments going forward, which is how Chapter 13 halts foreclosures. For some vehicle and other secured loans, the plan can restructure the balance or interest rate through cramdown, discussed below.
Unsecured Debts
Credit cards, medical bills, and similar debts get whatever disposable income is left. There is a floor: unsecured creditors must receive at least what they would have gotten in a Chapter 7 liquidation of your non-exempt assets. This “best interests of creditors” test is a minimum, not a target. Plans often pay unsecured creditors pennies on the dollar, and some pay nothing at all.
Duration and Disposable Income
Plan length turns on how your household income compares to your state’s median for your family size. Below-median filers get a three-year plan. At or above the median means five years.3Office of the Law Revision Counsel. 11 U.S.C. 1325 – Confirmation of Plan Either way, you can finish early by paying all allowed unsecured claims in full.
Disposable income is what’s left each month after reasonable and necessary expenses. The court doesn’t take your word for what’s necessary. It applies IRS National Standards and Local Standards for food, clothing, housing, utilities, transportation, and healthcare.4United States Trustee Program. Means Testing The national standards for food and clothing apply by family size without proving what you actually spend. For housing and transportation, you get the lesser of the local standard or your actual expense. If the standardized amounts leave you short on real necessities, you can request actual expenses with documentation. The Chapter 13 Means Test on Official Forms 122C-1 and 122C-2 runs these calculations and determines the three-versus-five-year outcome.5United States Courts. Means Test Forms
Cramdowns and Lien Stripping
Two restructuring tools available in Chapter 13 but not in Chapter 7 can save serious money, and many filers don’t know they exist.
Vehicle Cramdown
If your car is worth less than the loan balance, a cramdown reduces the secured claim to the vehicle’s replacement value and reclassifies the shortfall as unsecured debt, which may be paid at pennies on the dollar or not at all. The court can also lower the interest rate on the restructured loan.
The catch is timing: you can only cram down a vehicle loan if you bought the car at least 910 days (about two and a half years) before filing.3Office of the Law Revision Counsel. 11 U.S.C. 1325 – Confirmation of Plan Inside that window, the plan has to pay the full loan balance if you want to keep the vehicle.
Stripping a Junior Mortgage
If your first mortgage balance exceeds your home’s fair market value, any second or third mortgage is wholly unsecured because no equity is left for it to attach to. A Chapter 13 plan can reclassify that junior mortgage as unsecured debt.6Office of the Law Revision Counsel. 11 U.S.C. 506 – Determination of Secured Status When you complete the plan and receive your discharge, the lien itself is voided. You’ll need an appraisal, and the first mortgage has to fully exceed the property’s value. If your case is dismissed before completion, the lien springs back.
What the Plan Costs
The court filing fee is $313: a $235 base fee plus a $78 administrative fee.7United States Courts. Bankruptcy Court Miscellaneous Fee Schedule Unlike Chapter 7, the filing fee can be folded into the plan payments rather than paid upfront.
Attorney fees are usually the biggest single expense. Many bankruptcy courts publish a “no-look” fee, a flat amount the court treats as presumptively reasonable for standard Chapter 13 work. If the attorney charges at or under that amount, the bill isn’t scrutinized. No-look fees vary by district, and most fall between $3,000 and $5,000. Complex cases involving business debts, contested lien stripping, or multiple properties run higher. Most of the attorney fee is paid through the plan itself, so you don’t need the full amount at filing.
The two mandatory counseling courses, pre-filing credit counseling and the pre-discharge financial management course, typically cost $10 to $50 each, and approved agencies must offer fee waivers for people who can’t afford them. Finally, the Chapter 13 trustee takes a percentage of every plan payment for administrative costs. Federal law caps this at 10%, and many districts run 6% to 8%.8Office of the Law Revision Counsel. 28 U.S.C. 586 – Duties; Supervision by Attorney General The percentage is built into your monthly plan payment rather than billed separately.
Filing, the 341 Meeting, and Confirmation
The petition uses Official Form 101,9United States Courts. Voluntary Petition for Individuals Filing for Bankruptcy but the real work is in the supporting schedules. Federal law requires copies of all pay stubs or other payment records received within 60 days before filing, plus federal tax returns for the four tax years ending before the filing date.10Office of the Law Revision Counsel. 11 U.S.C. 521 – Debtor’s Duties Schedules A through J cover real and personal property, secured and unsecured debts, income, and household expenses.11Legal Information Institute. Federal Rule of Bankruptcy Procedure 1007 – Lists, Schedules, Statements, and Other Documents Schedules I and J drive the whole plan because they set your monthly net income after necessary living costs.
Filing triggers the automatic stay, which stops collection calls, lawsuits, garnishments, foreclosures, repossessions, and utility shutoffs for pre-filing debts.12Office of the Law Revision Counsel. 11 U.S.C. 362 – Automatic Stay A creditor can ask the court to lift the stay by showing they aren’t adequately protected, such as a car depreciating without payments coming in. The stay is narrower for repeat filers: if a prior case was dismissed within the past year, the new stay lasts only 30 days unless the court extends it, and two dismissals in a year mean no automatic stay at all unless the court orders one.
The trustee appointed to your case is not your representative or the creditors’. Their job is to evaluate whether the plan is feasible, collect your payments, and distribute the funds.
The Meeting of Creditors, known as the 341 meeting, happens 21 to 50 days after filing.13Office of the Law Revision Counsel. 11 U.S.C. 341 – Meetings of Creditors and Equity Security Holders You appear under oath. The trustee asks about your finances, assets, and the proposed plan. Creditors can attend but rarely do. If your paperwork is in order, the meeting typically runs about 10 minutes. Bring a government photo ID and proof of your Social Security number, and expect the trustee to have received your recent tax return and account statements in advance.14U.S. Department of Justice. Section 341 Meeting of Creditors
Payments start before the judge signs off on anything. Your first payment to the trustee is due within 30 days of filing, even though confirmation hasn’t happened.15United States Courts. Chapter 13 – Bankruptcy Basics Many courts require payroll deduction; otherwise you pay electronically. The trustee holds the money until the plan is confirmed, then distributes it.
At the confirmation hearing, the judge checks that the plan meets the legal requirements: good faith, feasibility, full payment of priority claims, the best-interests-of-creditors floor, and commitment of all projected disposable income.3Office of the Law Revision Counsel. 11 U.S.C. 1325 – Confirmation of Plan The trustee or a creditor can object; common objections are that the plan holds back disposable income, undervalues collateral, or proposes below-median treatment on above-median income. Sustained objections mean amending the plan. Once confirmed, the plan binds you and every listed creditor.
Living Under the Plan
For the three or five years the plan runs, you’re on a tight leash. You can’t take on new debt without consulting the trustee, because new obligations can put the plan at risk.15United States Courts. Chapter 13 – Bankruptcy Basics That covers financing a replacement car, cosigning a loan, and opening a new credit card. Significant income changes have to be reported, because they can prompt a plan modification.
Modifications are built into the code. You, the trustee, or an unsecured creditor can ask the court to modify the plan any time after confirmation and before you finish payments.16Office of the Law Revision Counsel. 11 U.S.C. 1329 – Modification of Plan After Confirmation A modification can raise or lower payments to a particular class of creditors, stretch or shorten the timeline, or adjust for payments made outside the plan. One specific provision lets you reduce plan payments by reasonable, documented health insurance costs for yourself or uninsured dependents. Modified plans still have to satisfy the original confirmation standards, and the total payment period generally can’t exceed five years from when the first payment was originally due.
When the Plan Doesn’t Finish
The most common failure is missed payments. If you fall behind, the trustee or a creditor can ask the court to dismiss the case or convert it to Chapter 7, whichever better serves creditors.17Office of the Law Revision Counsel. 11 U.S.C. 1307 – Conversion or Dismissal Dismissal lifts the automatic stay and drops you back where you started, with collections, foreclosures, and lawsuits free to resume. Conversion to Chapter 7 hands your non-exempt assets to a liquidation trustee.
Other grounds for dismissal or conversion include unreasonable delays that hurt creditors, failure to file required tax returns, and falling behind on domestic support obligations that come due after filing. You retain one important right: you can voluntarily convert your case to Chapter 7 at any time, and that right can’t be waived by contract.
Hardship Discharge
If you can’t finish because of something genuinely beyond your control, such as serious illness, a plant closure, or a disability, you can ask for a hardship discharge. The court can grant it if the failure isn’t your fault, unsecured creditors have already received at least what they’d have gotten in Chapter 7, and a plan modification isn’t a workable alternative.18Office of the Law Revision Counsel. 11 U.S.C. 1328 – Discharge A hardship discharge covers fewer debts than the standard Chapter 13 discharge but still provides real relief.
Discharge and What Survives It
After your last plan payment, you complete the pre-discharge financial management course (the second required course). Once you file the completion certificate and the court confirms all priority obligations, including domestic support, are paid in full, the judge issues a discharge order that releases you from personal liability on most remaining unsecured debts covered by the plan.19Office of the Law Revision Counsel. 11 U.S.C. 1328 – Discharge The trustee files a final report and the case closes.
Several categories of debt survive discharge:
- Long-term obligations like a mortgage whose final payment comes due after the plan ends. Any arrears were cured; the underlying loan continues.
- Certain tax debts specified in the priority provisions.
- Debts for money obtained through false pretenses, false financial statements, or actual fraud.
- Domestic support obligations, whether owed to a spouse, former spouse, or a government unit collecting on their behalf.
- Student loans, unless you separately proved undue hardship in an adversary proceeding.
- Criminal restitution and fines.
- Debts for death or personal injury caused by driving under the influence.
- Restitution or damages from a civil action for willful or malicious injury resulting in personal injury or death.
One more trap: new debt taken on during the plan without trustee approval, when getting approval was practical, isn’t discharged either. That is a real reason the approval requirement isn’t a formality.
Effect on Your Credit
A Chapter 13 filing can appear on your credit report for up to seven years from the filing date. The Fair Credit Reporting Act allows bankruptcy cases to be reported for up to ten years,20Office of the Law Revision Counsel. 15 U.S.C. 1681c – Requirements Relating to Information Contained in Consumer Reports but the three major bureaus remove completed Chapter 13 cases at seven. Your score drops sharply at first, and many people qualify for new credit within a year or two of discharge, initially at less favorable rates.
Completing the plan rather than having it dismissed helps on the credit side. Lenders see that you followed through on a multi-year repayment commitment, which reads differently from a dismissed case or a straight liquidation. The rebuilding starts after discharge, on a fresh payment history without the old debt load.