Why people choose a repayment plan
Chapter 13 bankruptcy is available to individuals, including sole proprietors, but not to corporations or LLCs. You propose a plan that pays creditors over a multi-year period from your income, supervised by a standing trustee who collects the payments and distributes them. Its practical strength is that mortgage arrears can be cured through the plan while regular payments resume, which is why it is so often used to halt a foreclosure. It also protects people who co-signed certain consumer debts while the plan is running. There are debt ceilings for eligibility, and they have changed over time, so they are checked against your actual figures.
The budget behind the plan
Everything turns on whether the plan is affordable and honest. The court looks at your income, reasonable living expenses, and what unsecured creditors would receive compared with a liquidation. Bring pay records, a realistic household budget, mortgage statements showing the arrears, tax returns, and notices from any tax agency. Your regular mortgage and tax filings need to stay current once the case begins, and falling behind on those is a common reason cases are dismissed. If income is irregular, as with gig work or a small business, we need records that show how it actually moves month to month.
Questions we settle first
We start with what you want to protect, usually a home, a vehicle, or a business, and work backward to the payment that protection requires. If a foreclosure sale is already scheduled, the calendar drives everything else, and you should reach out as soon as you know the date. We check whether a prior filing affects the protection a new case would receive, since recent dismissed cases can weaken or remove it. We also compare the plan with Chapter 7 and with negotiating directly, so the choice is made on numbers you can live with for the length of the plan.
