So You’re Thinking of Filing Chapter 13?

What You Need to Know Before You Begin the Process

Filing for Chapter 13 bankruptcy is a serious decision—one that requires careful planning, clear understanding, and a firm commitment to follow through. Often referred to as a “wage earner’s plan,” Chapter 13 offers a structured path for individuals to repay part or all of their debts over a three to five-year period, while keeping their property and avoiding foreclosure or repossession. This option can be a lifeline for those who have regular income but have fallen behind on debts such as mortgage payments, car loans, or credit cards.

While Chapter 13 can provide meaningful relief and the opportunity for a fresh start, it is not a simple or automatic process. Before you can even file your petition, there are several important legal requirements you must meet. These requirements serve as a foundation for your case and help determine whether you are eligible to file and how your repayment plan will be structured.

In this in-depth guide, we’ll explore the pre-filing requirements for Chapter 13 bankruptcy in detail, explain why each step matters, and provide insights that can help you prepare for a successful journey through bankruptcy court.

1. Proof of Income: Demonstrating Your Ability to Pay

One of the core principles behind Chapter 13 is that you must have a steady source of income. Unlike Chapter 7, where most debts are discharged outright, Chapter 13 involves repaying debts over time. Therefore, your ability to make regular payments is essential.

To that end, before your case is filed, you must provide proof of all sources of income for the two months immediately prior to filing. This information is not only required by the court, but is also reviewed carefully by your bankruptcy trustee to determine how much you can reasonably afford to repay under your plan.

What Counts as Income?

• Paycheck stubs from employment
• Self-employment earnings
• Social Security income (SSI and SSDI)
• Pension or retirement benefits
• Unemployment compensation
• Workers’ compensation
• Rental income
• Child or spousal support received

If you have irregular or seasonal income, or if you’re self-employed, it’s particularly important to organize detailed records. The trustee will need to see consistent documentation that reflects your financial reality.

Why It Matters

Accurate income documentation helps establish your eligibility for Chapter 13, confirms that you can maintain a repayment plan, and sets the stage for realistic budgeting. Failure to provide complete and accurate income information can result in your case being delayed or dismissed.

2. Tax Returns: Getting Caught Up with the IRS

The Bankruptcy Code requires that you provide federal tax returns for the four most recent tax years before you file for Chapter 13. These returns must be filed and available for review by your trustee.

What If You Haven’t Filed?

If you’ve missed one or more years, you’ll need to file those returns before your case can proceed. If you weren’t required to file taxes during any of those years, a written statement explaining why you were exempt will be necessary.

Why Tax Returns Are Crucial

• They give a complete picture of your financial history.
• They help identify priority tax debts that may need to be repaid in full during the plan.
• They ensure compliance with legal requirements and prevent delays in your case.

Many bankruptcy trustees will not even schedule your 341 meeting (also known as the Meeting of Creditors) until your tax returns are on file.

3. Credit Counseling: A Required First Step

Before filing a Chapter 13 bankruptcy petition, you are legally required to complete a credit counseling session through an agency approved by the U.S. Trustee’s Office. This session must occur within 180 days prior to filing and must be completed before your case is submitted to the court.

What to Expect

• Duration: Typically 60 to 90 minutes
• Format: Available online, by phone, or in person
• Cost: Usually ranges from $15 to $50 (fee waivers may be available)

You will receive a certificate of completion that must be filed along with your bankruptcy petition. If you do not complete this step or forget to file the certificate, your case will be rejected.

Why It’s Important

This session is designed to help you understand the alternatives to bankruptcy, review your budget, and explore whether a repayment plan might be negotiated without court intervention. While you may already know that bankruptcy is necessary, the counseling session is a legal formality that cannot be skipped.

4. Creating a Realistic Repayment Plan

Although not a legal prerequisite, you should begin planning your repayment structure before filing your case. The plan you submit will outline how you intend to pay creditors over the course of three to five years, and it must follow the rules outlined in the Bankruptcy Code.

Your attorney will work with you to calculate:

• Your disposable income (what’s left after necessary living expenses)
• Which debts must be paid in full (e.g., secured debts, certain taxes, domestic support obligations)
• How much unsecured creditors (like credit cards and medical bills) will receive

A well-prepared plan demonstrates your good faith and can speed up the approval process. If your plan is unrealistic or underfunded, it will be challenged or denied.

5. Legal Representation: Why Hiring an Attorney Matters

Although it is possible to file Chapter 13 without an attorney, doing so is generally discouraged. Chapter 13 is far more complex than Chapter 7 and involves detailed financial disclosures, legal arguments, and ongoing interaction with the court and the trustee over the course of several years.

Attorneys will:

• Help you gather the necessary documentation
• Advise on exemption laws and plan requirements
• Prepare and file all paperwork
• Represent you at hearings and meetings
• Monitor your case over time and address any issues

Most bankruptcy attorneys offer free initial consultations and flexible payment plans. Some fees can even be included in your repayment plan.

Final Thoughts: Laying the Groundwork for a Successful Chapter 13 Case

Chapter 13 can be a powerful tool for reclaiming your financial future, stopping foreclosures, catching up on missed payments, and paying off debts in an organized and manageable way. But it is not something to rush into.

Before filing, take the time to:

• Gather complete income documentation
• File any missing tax returns
• Complete your credit counseling session
• Think through your proposed repayment strategy

Getting these steps right will position you for success and reduce the risk of case dismissal. With the right preparation and guidance, Chapter 13 can provide the stability and structure you need to move forward with confidence.

If you’re considering Chapter 13 bankruptcy, speak with an experienced attorney who can help you understand your options, meet your requirements, and build a plan that sets you up for long-term financial recovery.

This article is for informational purposes only and does not constitute legal advice. For guidance specific to your situation, consult a licensed bankruptcy attorney in your jurisdiction.