What is Chapter 13, and who is eligible for it?

What is Chapter 13, and who is eligible for it?

On Behalf of | May 2, 2022 | Bankruptcy |

If you are struggling with debt, you know it can be a lonely feeling. You may not want to tell your friends and family about your financial troubles, and this furthers your sense of isolation. It may be helpful to know that many people in New York are in very similar circumstances, and that there is help available. A professional with experience in debt relief law can help you understand your options to relieve yourself of debt.

Some of the strongest methods for debt relief fall under the U.S. Bankruptcy Code, but there remain many misconceptions about personal bankruptcy.

Chapter 7

The two most common forms of personal bankruptcy are known as Chapter 7 and Chapter 13, after their placements inside of the code.

Chapter 7 is sometimes known as liquidation bankruptcy. This is the type that most people probably think of when they hear of bankruptcy. It requires the filer to liquidate some of their assets in order to partially satisfy creditors. In a Chapter 7 bankruptcy, the filer can expect to eliminate most forms of their debt within 3-5 months.

Chapter 13

Chapter 13 is another form of bankruptcy that is somewhat less well known and not nearly as quick, but can be just as effective. It also has an advantage in that it doesn’t require the filer to liquidate assets. Instead, Chapter 13 protects the filer while they develop and implement a repayment plan. Carrying out the plan can take from 3-5 years. At the end of that period, if all has gone well, the court will waive much of the filer’s remaining debts, if any.


Because it requires the filer to make regular payments, the person must have a steady source of income in order to be eligible for Chapter 13. In other words, they must have a job, even if they are self-employed.

Chapter 13 also has requirements pertaining to the amount of the filer’s debts. The government adjusts these amounts periodically to account for inflation and other changes in the economy. Currently, Chapter 13 is available to debtors who have less than $394,725 in unsecured debt and less than $1,184,200 in secured debt.

Learn more

People who are in debt may have more options than they realize. If you are struggling with debt, an experienced attorney can help you assess your options for returning to financial health.