Filing Chapter 13 bankruptcy remains one of the most powerful tools for Americans struggling with debt while wanting to keep their homes, cars, and other property. As of December 2025, bankruptcy filings have risen 11.5 percent nationwide, with Chapter 13 cases continuing to climb as families face higher interest rates, persistent inflation, and mounting unsecured debt.
Individuals choose this path when they have regular income but need breathing room from overwhelming payments. The process creates a court-approved three- to five-year repayment plan that stops foreclosures, halts collections, and lets you catch up on missed mortgage or car payments over time. Current debt limits allow unsecured debts up to $526,700 and secured debts up to $1,580,125, making more middle-class households eligible than ever before.
This comprehensive guide walks you through every step of filing Chapter 13 bankruptcy in 2025, from eligibility and costs to the repayment process and life after discharge.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, often called the wage earner’s plan, lets you reorganize debts instead of liquidating assets. You keep your property while making one affordable monthly payment to a trustee, who then distributes the money to creditors according to a court-approved plan.
The plan typically lasts three years if your income falls below your state’s median or five years if it sits above. Priority debts like recent taxes and child support get paid in full. Mortgage and car arrears can be cured over the plan’s life. Most unsecured debts, such as credit cards and medical bills, receive only a fraction or nothing at all, depending on your disposable income.
At the end of the plan, remaining eligible debts disappear through discharge. This structure protects your home from foreclosure and your vehicle from repossession the moment you file.
Who Qualifies for Chapter 13 in 2025?
You qualify if you have regular income from wages, self-employment, Social Security, pensions, or even unemployment benefits in some districts. The key requirement is the ability to fund a repayment plan.
Current debt ceilings stand at $526,700 for unsecured debts and $1,580,125 for secured debts. These limits adjust every three years for inflation, and the latest increase took effect April 1, 2025.
You must complete credit counseling from an approved agency within 180 days before filing. All tax returns for the previous four years must be filed, and any domestic support obligations must stay current.
Previous bankruptcy discharges affect timing. You need to wait two years after a prior Chapter 13 discharge or four years after a Chapter 7 before receiving another Chapter 13 discharge.
Step-by-Step Process of Filing Chapter 13 Bankruptcy
1. Complete Credit Counseling
Take a course from an approved provider. Sessions last about two hours and cost $10–$50. You receive a certificate required for filing.
2. Gather Required Documents
Collect pay stubs for the last 60 days, tax returns for the last two years, bank statements, mortgage and car loan details, and a complete list of debts and assets.
3. Prepare the Petition and Plan
Your attorney (or you, if filing pro se) completes the official bankruptcy forms, including schedules of assets, liabilities, income, expenses, and the proposed repayment plan.
4. File with the Court
Submit everything electronically or in person along with the $313 filing fee. The automatic stay begins immediately, stopping all collection actions.
5. Attend the 341 Meeting of Creditors
About 30–40 days after filing, you meet the trustee and any creditors who appear. The trustee asks questions about your finances and plan under oath.
6. Get Your Plan Confirmed
The court holds a confirmation hearing. Once approved, your plan becomes binding on all creditors.
7. Make Plan Payments
Payments start 30 days after filing and continue for 36–60 months. The trustee distributes funds to creditors.
8. Complete Financial Management Course
Take a second debtor education course after filing to qualify for discharge.
9. Receive Your Discharge
After finishing all payments, the court issues a discharge erasing remaining eligible debts.
Advantages of Filing Chapter 13 Bankruptcy
- Keep your home and stop foreclosure permanently by catching up arrears over time
- Retain vehicles and other property—no forced sales
- Cram down certain secured loans (reduce balance to the asset’s current value)
- Protect co-signers with the co-debtor stay
- Pay tax debts and domestic support over 3–5 years without additional penalties
- Rebuild credit faster than with Chapter 7—many see scores rise during the plan
Disadvantages to Consider
- Requires steady income and strict budgeting for 3–5 years
- Total cost, including trustee fees, typically ranges from $4,000–$6,000
- Only about 40 percent of plans complete successfully
- Remains on your credit report for seven years from the filing date
- Major financial changes (job loss, illness) can jeopardize the case
2025 Chapter 13 Statistics and Trends
Total bankruptcy filings reached 542,529 in the 12 months ending June 30, 2025, up 11.5 percent year-over-year. Chapter 13 cases continue to represent roughly 39–40 percent of all individual filings.
Auto loan delinquencies and credit card interest rates above 21 percent drive many households to seek relief. Monthly Chapter 13 filings average over 17,000 nationwide, with the highest concentrations in California, Texas, Florida, Georgia, and New York.
Recent Changes Affecting Chapter 13 Cases
Debt limits increased significantly in April 2025, raising eligibility for thousands of additional households. New bankruptcy forms introduced in December streamline mortgage-related notices. Courts now allow hardship modifications that can extend plans beyond five years in extreme circumstances.
Life After Chapter 13 Discharge
Your credit score often begins improving within 12–18 months of consistent plan payments. Many filers qualify for FHA mortgages one year after discharge and conventional loans two years later. Focus on building positive payment history, keeping balances low, and creating an emergency fund.
Share your experience with filing Chapter 13 bankruptcy in the comments—what helped you succeed, or what do you wish you had known before starting?