Are you looking for a way to manage or reduce your debt as efficiently as possible? Chapter 13 of the United States Bankruptcy Code provides a legal solution for those who do not qualify for Chapter 7 or who have sizable assets they wish to retain. If you earn a steady income or want to protect valuable assets, this type of bankruptcy plan may be right for you.
The Law Office of James J. Rufo has been a stable presence for clients in and around White Plains and New York City who need solutions to crushing debt. My firm has been guiding individuals and small businesses through all the variations of the Bankruptcy Code for nearly a decade. As a result of my concentration on this area of law, I understand the state and federal statutes governing bankruptcy and have kept up with new legal developments. Over the years, I have developed a beneficial rapport with the bankruptcy judges who may oversee your case. Throughout the entire process, you can rely on my unfailing support, counsel, and direct involvement.
What Is a Chapter 13 Bankruptcy?
Chapter 13 bankruptcy was designed for those who have the income needed to make monthly payments through a three (3) or five (5) year payment plan. A Chapter 13 debtor makes monthly payments to the Chapter 13 trustee, and the Chapter 13 trustee pays your creditors according to your plan. Eligibility for a Chapter 13 filing is based on how much secured and unsecured debt you have; these levels cannot exceed a certain amount.
A Chapter 13 debtor’s monthly chapter 13 plan payment is equivalent to the amount of income that is left over after deducting the debtors’ reasonable and necessary monthly living expenses from their net monthly income. The type of debts incurred will also influence the amount of your monthly chapter 13 plan payment. A Chapter 13 debtor may wind up paying only a portion of their unsecured debt after the full repayment period has ended with any remaining amount left over being discharged. However, certain priority debts must be fully repaid, such as tax bills, child support, and others.
Your Path to Financial Freedom Begins Here
Get your questions answered by contacting me, James J. Rufo, Esq. at (914) 600-7161 or via email at jrufo@jamesrufolaw.com today. Your initial consultation is free.
This type of bankruptcy
can work for the following:
-
Those that do not qualify for a Chapter 7 liquidation plan but need to lower their payments of unsecured debt or stop lawsuits
​
-
Those who wish to catch up on debt such as alimony or child support over the span of the payment plan
​
-
Those who wish to eliminate unsecured lesser liens on your home or stop foreclosure by catching up on missed mortgage payments
​
-
Those who wish to stop repossession of a vehicle by catching up on car payments
Do I Qualify for Chapter 13 Bankruptcy?
To file for Chapter 13, you must meet the following requirements:
-
You are an individual or couple. Businesses cannot file for Chapter 13.
-
You did not have debt discharged from a previous Chapter 13 case within the last 2 years.
-
You did not have debt discharged from a prior Chapter 7 case within the last 4 years.
-
You cannot file if a prior filing of yours was dismissed within the last 180 days for violating a court order, failing to appear before the court, or requesting that your case be dismissed after a creditor requested the automatic stay be lifted.
-
You completed a credit counseling course 180 days before filing.
-
Your debt is within the limits. These are adjusted every 3 years -- as of April 2019 the limits are:
-
Unsecured debt is under $526,700
-
Secured debt is under $1,580,125
-
-
Your income tax returns have all been filed.
-
You have enough disposable income to repay your debt while living comfortably.
Your Path to Financial Freedom Begins Here
Get your questions answered by contacting me, James J. Rufo, Esq. at (914) 600-7161 or via email at jrufo@jamesrufolaw.com today. Your initial consultation is free.
Chapter 13 vs. Chapter 7 Bankruptcy
The difference between Chapter 7 and Chapter 13 is that, generally, a Chapter 7 bankruptcy liquidates nonexempt property to pay off your creditors and discharge remaining debt. Chapter 13, on the other hand, is a repayment plan that allows you to keep your nonexempt property.
​
Many people file Chapter 13 because they don’t qualify for Chapter 7. Under the Chapter 7 means test, you generally must make less than your state’s median income to qualify. Some, however, will choose Chapter 13 even though they qualify for Chapter 7 because they want to stop foreclosure and keep other high-value assets. Chapter 13 bankruptcies are exclusively for individual persons, a business cannot file a Chapter 13 Bankruptcy.
Frequently Asked Questions
What is the short answer on Chapter 13 bankruptcy?
Chapter 13 is a court-supervised repayment and reorganization chapter for individuals with regular income. It can protect property, cure mortgage or vehicle arrears, restructure eligible debts, and discharge qualifying balances after the debtor completes a three- to five-year plan.
Who can file Chapter 13?
Only an individual or married couple may be a Chapter 13 debtor, including an individual operating a sole proprietorship. A corporation, LLC, or partnership cannot file Chapter 13 in its own name.
What counts as regular income for Chapter 13?
Regular income can include wages, self-employment income, pension or retirement income, Social Security, rental income, support, and other reliable sources. The key issue is whether the income is sufficiently stable to fund the proposed plan and ongoing living expenses.
What are the current Chapter 13 debt limits?
For cases filed on or after April 1, 2025, an individual generally must have less than $526,700 in noncontingent, liquidated unsecured debt and less than $1,580,125 in noncontingent, liquidated secured debt. These federal amounts adjust periodically, so they should be verified again before publication and filing.
Is a Chapter 13 plan three years or five years?
The applicable commitment period is generally three years for a below-median debtor and five years for an above-median debtor, unless unsecured claims are paid in full sooner or another rule applies. Feasibility, arrears, vehicle treatment, taxes, and other plan terms also influence duration.
How is the monthly Chapter 13 payment calculated?
The payment is not a simple percentage of total debt. It must account for disposable income, nonexempt asset value, mortgage and vehicle arrears, priority claims, secured-debt treatment, trustee compensation, attorney fees, and the minimum distribution required by the Bankruptcy Code.
Do I have to repay every debt in full in Chapter 13?
Not always. Secured and priority claims may require specific treatment, while general unsecured creditors may receive anything from a small distribution to full payment depending on income, assets, debt type, and plan requirements. Any qualifying unpaid balance is discharged only after successful completion.
Can Chapter 13 stop a foreclosure in Westchester County?
A filing before the foreclosure sale generally invokes the automatic stay and may create time to propose a plan that cures pre-filing mortgage arrears. The debtor must also address ongoing mortgage payments and satisfy plan and court requirements; filing alone does not permanently eliminate the mortgage.
Can Chapter 13 help me catch up on missed mortgage payments?
Yes. Chapter 13 commonly allows a homeowner to cure pre-filing mortgage arrears over the plan while maintaining required post-filing payments. The plan must be affordable, and the lender may seek stay relief if ongoing obligations are not met.
What is the Southern District of New York Loss Mitigation Program?
The SDNY Loss Mitigation Program provides a court-supervised framework intended to help eligible debtors and mortgage creditors communicate about consensual options such as a loan modification. White Plains has specific forms and orders, and participation does not guarantee a modification.
Can Chapter 13 remove a second mortgage or home-equity lien?
In some cases, a wholly unsecured junior lien may be treated as unsecured and avoided after the required process, but the result depends on property value, senior liens, claim status, and controlling law. A partially secured mortgage on a principal residence is treated differently.
Can Chapter 13 stop a vehicle repossession?
A timely filing may stop a pending repossession and allow arrears or the secured claim to be addressed in the plan, but recovering a vehicle already repossessed can be more difficult and fact-specific. Insurance and post-filing obligations must remain current.