Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Information


A chapter 13 bankruptcy, unlike a chapter 7 bankruptcy, is called an individual reorganization bankruptcy. This bankruptcy is only available to individuals. Business entities such as partnerships, corporations, or LLCs cannot file a chapter 13 bankruptcy. In bankruptcy speak, the term reorganization means a bankruptcy plan. In the case of a chapter 13 reorganization, the plan requires that the individual have sufficient regular income to fund the plan over a period of 3 to 5 years. Plan payments are usually taken directly from your wages and sent to the chapter 13 trustee. The Chapter 13 Trustee will then turn around and pay your creditors. Once you have made all of your plan payments to the trustee, your plan will be deemed complete, and in you will get a Chapter 13 discharge (unless you filed a chapter 7 bankruptcy within 4 years of the Chapter 13 bankruptcy and received a chapter 7 bankruptcy discharge from that bankruptcy).

Individuals file chapter 13 bankruptcy for a wide variety of reasons. Sometimes, they file a chapter 13 bankruptcy because they have enough money in their budget to repay at least a portion of their debts. Sometimes they have a non-exempt asset that a chapter 7 trustee might sell, and by filing a chapter 13 bankruptcy they can retain the assets while paying the non-exempt equity of said asset to creditors through the plan. Many people may elect to file a chapter 13 bankruptcy because they want to save their house from foreclosure by maintaining the contractual mortgage payments on the house and getting caught up on the back payments over the 3 – 5 year period of the bankruptcy plan. Chapter 13 bankruptcy plans also help folks to retain vehicles and to reinstate suspended drivers licenses so long as the will pay off any unpaid tickets or fines. 

What can Chapter 13 do for you:

  • Stop Lawsuits and garnishments of wages or bank accounts
  • Stop endless harassing phone calls from debt collectors
  • Wipe out most kinds of debts
  • Allow you to recover garnished funds in some cases 
  • Save your home from Foreclosure
  • Stop a vehicle repossession
  • Reinstate a suspended drivers license
  • Retain non-exempt assets 
  • Get a fresh start

Contact us to learn more about Chapter 13 bankruptcy at our Tacoma or Aberdeen area offices. 



If I have already filed a bankruptcy, can I file another bankruptcy?


Can I remove a mortgage from my house with bankruptcy?


What happens if I file a chapter 13 plan, and later on I lose my job?