Individual Reorganization

Chapter 13

What is it?
Chapter 13 is designed to provide individuals with a method of financially restructuring their debts without liquidating their assets. A Chapter 13 Debtor remains in possession of her assets and control of her affairs, but is required to propose a plan of debt repayment (which will be based primarily on the Debtor’s future earnings). Although Chapter 13 requires the appointment of a Chapter 13 Trustee, the Chapter 13 Trustee’s role is essentially limited to the distribution of the payments provided under the Debtor’s plan of reorganization and to overseeing the Chapter 13 process.

Who can be a debtor?
Chapter 13 is available only to individuals with regular income who have noncontingent, liquidated unsecured debts of less than $307,675 and secured debts of less than $922,975. An individual and a spouse may file a joint Chapter 13 petition only if their combined financial picture meets these requirements. Individuals who do not meet these tests (i.e. unemployed people) must file under Chapter 7 or Chapter 11. There is no solvency requirement for filing under Chapter 13.