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Chapter 13 Bankruptcy
Stop Foreclosure, Protect Your Property, and Regain Control of Your Finances
If you have fallen behind on mortgage payments, are facing vehicle repossession, or need a structured way to repay debt while protecting your assets, Chapter 13 bankruptcy may provide the solution you need.
Chapter 13 bankruptcy allows individuals with regular income to reorganize their debts into an affordable repayment plan while receiving protection from creditors.
Unlike Chapter 7 bankruptcy, Chapter 13 enables many people to keep their homes, vehicles, and other important property while working toward long-term financial stability.
We help individuals and families throughout Louisville and surrounding Kentucky communities use Chapter 13 bankruptcy to stop collection actions, prevent foreclosure, and create a path toward financial recovery.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often called a "reorganization bankruptcy." Instead of eliminating debt immediately, Chapter 13 allows eligible individuals to repay all or a portion of their debts through a court-approved repayment plan.
Repayment plans generally last:
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Three years
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Five years
depending on income and other factors.
During the repayment period, creditors are generally prohibited from taking collection action as long as plan payments are maintained.
How Can Chapter 13 Bankruptcy Help Me?
Chapter 13 provides several important benefits that are not always available through Chapter 7.
Stop Foreclosure
One of the most common reasons people file Chapter 13 bankruptcy is to save their homes from foreclosure.
Chapter 13 allows many homeowners to:
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Stop foreclosure proceedings
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Catch up on missed mortgage payments
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Spread arrears over several years
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Maintain ownership of their home
If you have fallen behind on mortgage payments, acting quickly can be critical to saving your home.
Stop Vehicle Repossession
Chapter 13 may help prevent repossession of your vehicle and allow you to catch up on missed payments through your repayment plan.
Stop Wage Garnishments
The automatic stay that goes into effect when bankruptcy is filed generally stops most wage garnishments and collection efforts.
Manage Tax Debt
Certain tax obligations may be addressed through a Chapter 13 repayment plan, making them more manageable over time.
Protect Valuable Assets
Chapter 13 can be particularly helpful for individuals who own assets that may not be fully protected in a Chapter 7 bankruptcy.
Who Qualifies for Chapter 13 Bankruptcy?
To qualify for Chapter 13 bankruptcy, you generally must:
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Have regular income
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Meet applicable debt limitations
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Be able to propose a feasible repayment plan
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Complete required credit counseling
We can evaluate your financial circumstances and determine whether Chapter 13 is appropriate for your situation.
What Steps are involved in filing a Chapter 13 Bankruptcy?
1. Initial Consultation
Your attorney reviews your documents, finances, debts, assets, and goals.
2. Proposed Plan Creation
We prepare a Proposed Payment Plan with you that takes into account your monthly income and expenses.
3. Credit Counseling
Federal law requires completion of an approved credit counseling course before your case is filed.
4. Filing the Bankruptcy Petition
After you have signed the Petition and Schedules, pay the Court Filing Fee, and are okay with the Proposed Payment Plan, your case is filed with the bankruptcy court.
5. Automatic Stay Protection
Collection calls, lawsuits, foreclosure actions, and many garnishments must stop.
6. Plan Payments Begin
Your bankruptcy starts and your Plan Payments begin accruing on the day your case is filed. Your first plan payments will be due prior to the Meeting of Creditors or your Plan being Confirmed. You will also need to resume making any regular monthly mortgage payments, car loan payments, or any payments on any accounts that are not included in your Proposed Plan as being paid through the Trustee.
7. Debtor Education (Financial Management)
Federal law requires completion of an approved financial management course after your case is filed.
8. Meeting of Creditors (341 Meeting)
You attend a brief hearing over Zoom where a bankruptcy trustee asks questions regarding the documents filed in your case, your financial information, and your Proposed Payment Plan.
9. Plan Confirmation
Some clients' Proposed Payment Plans are reviewed and approved at or immediately following the Meeting of Creditors and other clients will need to appear at an in-person Confirmation Hearing with a Bankruptcy Court Judge.
10. Continued Plan Payments
Once your case is Confirmed, you will continue making your payments to the Trustee as Ordered and comply with all other Orders of the Court for the remainder of your Chapter 13 Bankruptcy.
11. Discharge
After successful completion of the plan, eligible remaining debts may be discharged.
Can I Save My Home by Filing Chapter 13 Bankruptcy?
For many Kentucky homeowners, this is the most important question.
Chapter 13 bankruptcy can often provide a way to:
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Stop a foreclosure lawsuit
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Stop a pending foreclosure sale
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Catch up on missed mortgage payments
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Continue making regular mortgage payments
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Remain in your home
The earlier you seek legal advice, the more options may be available.
Should I Consider Filing Chapter 13 Bankruptcy?
Chapter 13 may be appropriate if:
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You are behind on mortgage payments
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You need to stop foreclosure
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You need to stop repossession
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You have significant non-exempt assets
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You have income that may prevent Chapter 7 eligibility
An attorney can help determine which chapter best meets your goals.