Understanding Chapter 13 Bankruptcy – A Path to Stability
- Rebecca S. Wright
- Sep 1
- 2 min read
Updated: Sep 4
What is Chapter 13 Bankruptcy? Who is it for, What debts can be included, and How Does it Work?
If you have a steady income but are still drowning in debt, Chapter 13 may be the right option. Instead of wiping debts away immediately like Chapter 7, Chapter 13 allows you to reorganize your finances and repay a portion of what you owe over time.
Who Typically Files Chapter 13 Bankruptcy?
Homeowners behind on mortgage payments who want to stop foreclosure.
Car owners at risk of repossession.
People whose income is too high for Chapter 7 but who still need debt relief.
Families wanting to protect valuable assets not covered by exemptions.
What types of debt are included?
Almost any debt you have can typically be included in a Chapter 13 Bankruptcy.
Unsecured Debt - this is debt that doesn't have collateral associated with it, such as credit cards or personal loans.
Secured Debt - this is collateralized debt like a mortgage, car loan, HELOC,
Medical Debt
Debt owed because of a civil lawsuit or judgment against you.
Child Support, Alimony, and Tax Debt
The Process in Plain English
Preparation: With your attorney, you'll gather all your documentation and draft your petition and create a repayment plan based on your available disposable income.
Filing & Automatic Stay: Just like Chapter 7, upon filing your petition, all collections, garnishments, and lawsuits must stop immediately.
Meeting of Creditors: As with Chapter 7, about a month later, you’ll attend a short meeting to answer basic questions about your finances and your repayment plan. This is called the "341 meeting." In Wyoming, these meetings take place over Zoom.
Waiting Period: the Trustee and/or the Creditors can raise objections to your repayment plan, but this is uncommon.
Plan Confirmation: The bankruptcy court reviews and approves your repayment plan.
Making Payments: You’ll make regular monthly payments to a trustee, who distributes funds to creditors. Your repayment plan will last 3 or 5 years, depending on your income.
Discharge: At the end of the plan, any remaining eligible debts are wiped out.
Why Chapter 13 May Be Better Than a Debt Program
Unlike debt management plans, Chapter 13 gives you the power of the automatic stay - creditors must stop all collection activity and accept repayment through the court-approved plan. Debt programs can't provide these guarantees. If you need time and structure to catch up, Chapter 13 Bankruptcy provides exactly that.
Life After Chapter 13
Completing your repayment plan takes discipline, but the result is worth it—current on your mortgage, your car safe from repossession, and a clear path forward with debts behind you.
