Chapter 13 in a Nutshell

Like Chapter 7, Chapter 13 comes with mountains of paperwork that will need just about every detail of your financial past. And thanks to the new law, documentation is required as well. Be prepared to start digging for all those receipts you’ve filed away over the years and hold tight to your patience.

With Chapter 13, the benefit is that you get to keep your property, but you will have to pay off your debt in three to five years. Keep in mind that you cannot file if your unsecured debt exceeds $269,250 or if your secured debt exceeds $807,550.

Otherwise, if you choose to go the Chapter 13 route, you will need to provide the courts with the same information as you would if you were filing for Chapter 7. This means, you’ll need to tell the courts about:

Any property you own
Your current income and your employer
Current living expenses
Your debts
Any property you sold or gave away in the last two years

With Chapter 13, you’ll also need to provide a detailed plan on how you plan to pay off your debt. If you don’t have an action plan, you’re going to need to get one, because you will only have three to five years to pay everything off. Once your plan has been heard by the judge, he or she can approve or reject it.

Once approved, you will make your payments to a court appointed trustee. Then, at the end of your action plan, you will have the option to modify it if you have not been able to pay off all of your debt. You can also try filing for Chapter 7 at this point too.

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