Chapter 13 Bankruptcy Cases
Chapter 13 bankruptcy is a form of bankruptcy where debtors are required to pay back there debts over a period of time. Read this post to find out more about this form of bankruptcy.
  • chapter 13
  • COVID19
  • bankruptcy
Published on Sep 23, 2020


We’ve already been hit pretty hard economically at the beginning of 2020, and many people across the country are wondering if we are in a recession.


During uncertain times, people often start looking for financial assistance options, and many start filing personal chapter 13 bankruptcy cases. Could this be the right option for you? Here’s what you need to know about chapter 13 bankruptcy.



What is a chapter 13 bankruptcy?

A chapter 13 bankruptcy helps a debtor repay debts over three to five years when they have a regular income. This is an option that differs from liquidation and allows those in debt to get back on their feet without too drastic of measures. it’s called the “Wage Earner’s” plan because it helps those who do have income but may be struggling to manage challenging deadlines and demands from creditors. These bankruptcies usually result in a discharge.


Benefits of a chapter 13 bankruptcy include:

  • Avoiding liquidation (chapter 7 bankruptcy)
  • Saving foreclosures by stopping proceedings
  • Extending or rescheduling debt payments
  • Lowering payments
  • Avoiding direct interactions with creditors since payments are handled by a chapter 13 trustee
  • Avoiding loss of property


Downsides of a chapter 13 bankruptcy:

  • Debts are paid off by disposable income (anything that is leftover after necessities)
  • Will still negatively impact your credit and can remain on your credit report for up to 10 years
  • Credit cards will be forfeited
  • It will be difficult to get a mortgage or other lines of credit
  • Does not eliminate student loan debt


The CARES Act passed earlier this year has made temporary changes to Chapter 13 bankruptcy under the United States Bankruptcy Code. These adjustments are:

  1. Any coronavirus payments are not included when calculating a person's disposable income for a Chapter 13 case.
  2. Chapter 13 debtors who have already filed and are set up on a repayment plan are able to change the terms of their plan. For example, debtors can stretch their plan out over seven years after the first payment was due.


Filing for bankruptcy during a recession is a reality for many people. While this option still impacts your credit, it allows you to get out of debt while keeping property and assets, so it’s a lesser blow.



NextChapter helps attorneys prepare and file chapter 13 bankruptcy cases, which have already increased in number as the 2020 Recession becomes a reality. Check out our Chapter 13 Package that provides all the tools you need in an easy-to-use cloud-based bankruptcy software.