The Chapter 13 solution can be viewed as a “debt repayment plan.”  A bankruptcy under Chapter 13 is actually a government-supported repayment plan that you create, with the help of a qualified bankruptcy attorney, the U.S. bankruptcy court and the U.S. Trustee.  A Chapter 13 repayment plan is an excellent option when your creditors refuse to help you rearrange your debt so that you can live a reasonably stress-free and happier life. 

Not everyone qualifies for the Chapter 13 solution.  In most instances, in order to qualify, you must have regular disposable income.  Regular disposable income is what is left when you subtract your monthly expenses from your monthly income.  You must have disposable money if your Chapter 13 repayment arrangement requires you to pay off some of your debt.

There is an instance where you may not need disposable monthly income at the beginning of the case. The Chapter 13 solution can be used to help you get a loan modification.  Obtaining loan modifications is a very difficult and grueling process.  It can be a bit easier to manage under the watchful eye of the U.S. Bankruptcy Court.  Although, the court cannot force a lender to give you a modification on the principle loan on your primary residence, the court can make it harder for the banks to mistreat you during the process.  Additionally, you may not need disposable income to pay the bank arrears until you receive a modification which would hopefully reduce or get rid of the arrears.

The Chapter 13 solution is a very effective in many circumstances where the debtor has an asset, such as a house or car, that she wants to keep but is too far in arrears to reach an agreement to repay the creditor.  If the debtor successfully fulfills the plan she creates with the guidance of her attorney, the trustee and the bankruptcy court, at the end she may achieve other benefits such as the discharge of unsecured debt and the avoiding of judgments against property.

The Chapter 13 solution is probably not the right solution if (1) you qualify for a Chapter 7, (2) you do not have an asset you want to keep, and (3) you have little or no disposable a income.  It is very rare, but be careful that you are not unnecessarily convinced to file a Chapter 13 which may not be the right solution for your problem.  


To learn more about Chapter 13 compared to Chapter 7 read our article about Chapter 7 v. Chapter 13.

We also recommend that you read our Bankruptcy FAQs which we believe is one of the best on the internet.  However, if you think we can do even better, let us know by contacting us at

For more information about the loan modification process, you should subscribe to our new ebook, 10 Secrets to Successful Loan Modification by Rhinold Lamar Ponder.


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