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For Those With Steady Income, Chapter 13 Bankruptcy Offers Many Advantages

The economic difficulties of recent years have resulted in many Americans-even those who managed to keep their jobs-falling behind on their bills. This has pushed many into bankruptcy to ease their financial situation. For many people who are employed, but still unable to make a dent in their bills, Chapter 13 bankruptcy may provide a solution.

Chapter 13 bankruptcy is a type of bankruptcy that allows people who have a regular income to develop a payment plan to repay all or some of their debts. In this type of bankruptcy, people filing for bankruptcy (also known as debtors) propose a repayment plan and make payments to their creditors in installments under the plan for a three to five-year period. Chapter 13 can make it more affordable for the debtor to catch up on bills, by stretching the repayment of the debts over this long period.

Chapter 13 advantages

An advantage of Chapter 13 bankruptcy is, unlike Chapter 7, it does not require debtors to give up certain property in exchange for a discharge of their debts. On the contrary, the debtor can keep his or her property while making payments under the payment plan. In addition, Chapter 13 also provides the following advantages:

  • Stopping foreclosure. Unlike Chapter 7, which merely delays foreclosure, Chapter 13 allows debtors to stop foreclosure proceedings and catch up on back mortgage payments over the term of the payment plan.
  • Reschedule secured debts. Chapter 13 can extend the payments of secured debts-debts where collateral is required as part of the transaction (e.g. car loan)-over the term of the payment plan, allowing the debtor to catch up on missed payments and avoid repossession of the collateral.
  • Protect co-signers. Chapter 13 protects third parties who are liable with the debtor for consumer debts.


All individuals wishing to file for Chapter 13 bankruptcy must meet certain income requirements. If the debtor’s income in insufficient, his or her application may be rejected because of the inability to make regular payments under the payment plan.

Additionally, Chapter 13 is limited to debtors who have unsecured debts of less than $360,475 and secured debts of less than $1,081,400. Unsecured debts are debts where collateral is not required to complete the financial transaction, such as credit card charges or medical bills.

Chapter 13 bankruptcy offers many advantages over other debt relief options. However, whether it is right for you depends on your personal circumstances. It is therefore wise to consult with a knowledgeable bankruptcy attorney who can recommend the debt relief option that will fit your situation. If you are in the Detroit or Newport Beach, California areas, contact 248-218-1473 or reach out by email to schedule your initial consultation.