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Debt is difficult. Declaring bankruptcy is even more difficult. But the common misconception is that bankruptcy is inherently a bad thing. It’s, in fact, designed to help you. While there’s a lot of shame that can go into the decision, bankruptcy is designed to give you a clean start by maximizing your assets to wipe away debt and start fresh. Since there are different types of bankruptcy filings, choosing the right debt relief option begins with understanding how the process works. Chapter 13 bankruptcy is one of them.

What is Chapter 13 bankruptcy and how do I know if it’s right for me?

Chapter 13 bankruptcy is also known as a wage earners plan. Rather than utilize all your assets and property, this version is designed for someone deep in debt with a steady source of income. Your income is planned to be allocated to debt to get it paid off within 5 years.

If you’re considering bankruptcy as a way to handle your debts, you need to do research before even seeking out an advisor to speak to. We’ve put together a guide to help you.

Who Is Eligible?

A wage earner in any capacity (whether salaried or freelanced) is eligible to file for Chapter 13 bankruptcy as long as their secured debts are <$394,725. It is important to note that this applies only to individual wage earners. A corporation or entity of any type is not eligible to apply for Chapter 13 bankruptcy. A person will become ineligible for this if, in the 180 days prior to filing, they previously filed for bankruptcy and failed to appear in court. You are also required to have received credit counseling within 180 prior to filing.


For those who are eligible, Chapter 13 has a lot of advantages over filing for other bankruptcy chapters. First and foremost, it saves homes and other properties from foreclosure and possession to pay off debts. If these proceedings have already started, this filing can stop them. It also has other benefits such as assisting in mortgage and other long-term payments and protects third parties as well.

How to Begin

You must file at a court within your area of residence. At this time you’ll also be required to submit a certificate of credit counseling valid within the past 180 days prior to filing. You’ll be asked to turn over documentation on current income, current debts and liabilities, and any and all documents relating to financial affairs. You will be assigned a counsel to assist you during the process in scheduling payments, setting up the overall plan, and making sure you’re on track during the duration of the payment plan. This is the time for you to seek help from a bankruptcy attorney so that you know your rights and protect what is important.

Related Questions

Are There Fees to Filing Bankruptcy?

As part of filing for bankruptcy, the court will charge you a $235 filing fee and an additional $75 fee to cover miscellaneous court and proceeding costs. While you can take this on without a lawyer, the success rate is low. Attorney fees vary but typically average around $1000 for a lawyer to assist you on this case.

Are There Downsides?

There are downsides to any bankruptcy case, it is, after all, bankruptcy. One disadvantage is that you will lose all disposable income during this process. Anything that is not being allocated to necessities will be put towards handling your debt. You will also lose all your credit cards and your credit report will reflect bankruptcy for as much as 10 years. You will also have other debts to handle during and after this process, including mortgages and student loans.

Bankruptcy is scary, but it doesn’t have to be the end of the world. Know what you’re getting into and understand how it works. Let our Massachusetts Bankruptcy Lawyers at Hines Law protect you! We understand that drowning in debt can seem overwhelming, however, you have options. We specialize in Chapter 7 and Chapter 13 and our commitment is to our clients by providing a debt-free future. Call today for a Free Case Evaluation!