Chapter 13 Bankruptcy: How Repayment Plans Work and Who Qualifies
Chapter 13 bankruptcy can be a practical option when you have a steady income but need more time to address debts in an organized way. Instead of trying to resolve everything at once, you propose a repayment plan and make structured payments over a set period. Many people look at Chapter 13 to protect important property while catching up on overdue amounts.
Chapter 13 has clear rules about who can file, what a plan must cover, and what happens if circumstances change. The main issue is whether the payment fits your real monthly budget. Getting familiar with those parts helps you avoid surprises after filing.
In Oregon, I work with people who are evaluating whether Chapter 13 is a viable path given their income, expenses, and debt types. At Lyndon Ruhnke P.C., I serve clients in the Portland Metropolitan Area, including Portland, Beaverton, and Gresham, as well as across Oregon.
Chapter 13 Bankruptcy Basics
Chapter 13 is a repayment bankruptcy in which you propose a plan to pay some or all of your debts over time. After filing, the court process begins, and many collection efforts are paused as the case progresses. You make plan payments to a trustee, who distributes funds in accordance with the confirmed plan.
Chapter 13 also has ongoing responsibilities during the plan term, including staying current with required payments and complying with court and trustee requirements. It’s not a single event; it typically lasts years rather than weeks. As a result, the best starting point is a realistic budget and a clear view of your debt categories.
How Repayment Plans Are Built
A Chapter 13 plan payment is based on your income, allowable expenses, and the debts the plan must address. Some debts can be paid in part, while others must be paid in full under the plan.
Additionally, the plan must comply with rules that may set minimum payment requirements based on your financial situation. These rules are why two people with similar debts can end up with different payment plans.
It’s also important to separate plan payments from ongoing payments that may continue outside the plan. For example, if you’re keeping a home or vehicle, you may need to stay current on regular monthly payments while using the plan to catch up on arrears. That’s one reason affordability is more than a single number.
Who Qualifies for Chapter 13
Chapter 13 generally requires a regular income sufficient to make a steady monthly payment. You’ll also need to complete the required pre-filing steps and provide full financial disclosures, since the trustee and court review your income, expenses, assets, and debts.
Chapter 13 eligibility can also depend on how much secured and unsecured debt you have, and those limits can change over time. If debt totals are outside the allowable range, a different chapter may be required.
Qualification also involves practical feasibility, not just legal eligibility. If the plan payment would leave you unable to meet basic living costs or ongoing obligations, the plan may not be confirmable as proposed. That’s why it's helpful to review income stability and realistic monthly expenses before filing.
Chapter 13 doesn’t treat every debt the same way, and the category often matters as much as the balance. Some obligations must be paid in full; others may be paid only in part. Secured debts usually require attention to both the collateral and any missed payments. A clear way to think about plan treatment is to group debts by how the plan typically handles them:
Priority debts: These often include domestic support obligations and certain taxes and must be paid in full through the plan.
Secured debts tied to property you want to keep: These may involve catching up on arrears through the plan while staying current on ongoing payments.
General unsecured debts: These often include credit cards and medical bills, and the amount paid can depend on disposable income and other plan requirements.
Debts that may remain after the case: Some obligations, such as most student loans, may still be due after the plan ends, even if the plan provided temporary relief.
Co-signed debts: These can create additional issues because a non-filing co-signer may still be subject to collection, depending on how the debt is handled.
Once you know which debts drive the plan and which debts may be reduced, the case becomes easier to model and budget for. It also helps you anticipate what the trustee is likely to focus on during review. With debt treatment in mind, the next step is understanding the case timeline from filing through discharge.
Key Steps From Filing to Discharge
A Chapter 13 case follows a sequence with required events, deadlines, and review points. The details vary, but most cases follow predictable stages that determine when protections apply and what you must do to remain in good standing. If you’re trying to picture the process from start to finish, the case often follows these steps:
File the case and propose a plan: You submit the petition, schedules, and a proposed repayment plan based on your financial disclosures.
Provide documents to the trustee: You share pay information, tax records, and other materials the trustee needs to verify what was filed.
Attend the meeting of creditors: You answer questions under oath and address follow-up requests related to income, expenses, or debts.
Resolve issues and confirm the plan: Objections may require changes before the court approves the plan terms.
Complete the plan and receive discharge: If you stay current on plan payments and complete the required education steps, qualifying debts may be discharged at the end.
After confirmation, the case is typically less event-driven and more focused on consistent payments and compliance. That’s also when real-life changes can strain a plan that worked at first. Because of that, it’s important to understand what happens if your budget shifts during the plan term.
Reach Out to an Experienced Bankruptcy Lawyer
Chapter 13 decisions usually come down to cash flow, debt categories, and whether the plan fits alongside ongoing obligations. Consult my office, Lyndon Ruhnke P.C., so I can review your income, expenses, and debts and explain what a workable repayment plan could look like in your situation.
I’m proud to serve clients in the Portland Metropolitan Area, including Portland, Beaverton, and Gresham, as well as across Oregon. If you’re considering Chapter 13, reach out to discuss whether you qualify, what a plan payment might involve, and what steps you’d need to take next.