Also known as a wage earner's plan, Chapter 13 bankruptcy was designed to provide individuals with a regular income to have an adjustment of their debts. As opposed to Chapter 7, Chapter 13 allows those in debt to keep their property and develop a plan to repay all or part of their debts over a scheduled time period. Typically, a repayment plan will be developed and proposed to allow individuals to make installments to creditors over three to five years. Depending on the circumstances surrounding your case and what you wish to accomplish, this chapter of bankruptcy can be a beneficial action in organizing your finances and charting a feasible path toward a debt free future. You must have a regular income and disposable income to qualify for Chapter 13; this chapter allows you to do the following:

  • Retain possession of certain property and assets
  • Reduce total debt owed
  • Maintain the possibility for substantial relief on unsecured debts


One of the most prominent differences between Chapter 7 and 13 is that Chapter 13 may allow you to keep your property or save your home from a foreclosure. If your goals revolve around keeping your house, Chapter 13 may be the most beneficial legal action to take. Although debts are not forgiven, filing under Chapter 13 will temporarily halt foreclosure proceedings, allowing you the time to become current on your loan over time. You may also be able to restructure secured debts and extend a feasible plan over the three to five years outlined by Chapter 13 regulations. In addition to the possibility for lower payments, Chapter 13 will allow to consolidate your debt, as you will be making payments to a trustee who will then distribute separate payments to your creditors. While under Chapter 13 protection, you will have no direct contact with creditors.


To be eligible for Chapter 13, you must have unsecured debts less than $360,475 and secured debts less than $1,081,400. According to 11 U.S. Code §109, these numbers are rough guidelines that may be adjusted periodically to reflect economic changes. The length of the Chapter 13 plan and protection dictates the time frame you are allotted to make newly restructured debt payments and the time during which no creditors or collection agencies can take collection actions against you. The plan will either be between three and five years, and depends on your monthly income in relation to the state of Virginia's median monthly income. If your monthly income is less than the median, your plan can be three years, and if it is greater, your plan will five years. While determining whether you qualify for bankruptcy is an important part of the process, you should also take into account that certain actions may be more appropriate for your goals and financial plans. Working with an experienced bankruptcy attorney from our firm can help you evaluate your options and determine the most beneficial action.


The Chapter 13 process can be a lengthy and complicated process. With a great deal of legal work, forms and financial information needed, it becomes essential to a successful and smooth legal proceeding that you consult legal representation. Our firm will always personally evaluate your case and financial affairs and discuss your goals and options with you before undertaking any serious legal action. This is an excellent way to ensure that you make the most educated and beneficial decision and that Chapter 13 is a better choice than Chapter 7 or other alternatives to bankruptcy. Having provided more than 17,000 clients with experienced and affordable services, the David McCormick Law Group can help you take on the bankruptcy process. Contact us today.

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