Chapter 13 Bankruptcy

What Is Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy is called a "wage earner's plan." It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

Chapter 13 is one of the most useful tools available to individuals who have fallen behind on taxes while trying to keep up with other financial obligations. It can stop foreclosure, prevent repossession, and give taxpayers a structured path to resolving back tax debt.

How Chapter 13 Works

When you file for Chapter 13, an automatic stay goes into effect immediately. This stops most collection activities, including:

IRS levies, garnishments, and collection notices.

Foreclosure proceedings on your home.

Repossession of vehicles and other secured property.

Lawsuits and wage garnishments from private creditors.

You then propose a repayment plan that prioritizes certain debts — including recent tax obligations — and pays disposable income to unsecured creditors over the life of the plan.

Chapter 13 and Tax Debt

Chapter 13 is particularly powerful for individuals dealing with tax debt:

Priority tax claims (such as recent income taxes) must generally be paid in full through the plan, but without interest and penalties continuing to accrue.

Older non-priority tax debts can sometimes be discharged at the end of the plan.

Penalties and interest can be dramatically reduced or eliminated.

The IRS is bound by the automatic stay and the confirmed plan, just like any other creditor.

Eligibility for Chapter 13

Chapter 13 is available to individuals with regular income whose debts fall within statutory limits. To qualify, you must:

Have unsecured debts below the applicable statutory threshold.

Have secured debts below the applicable statutory threshold.

Not have previously had a bankruptcy case dismissed within the past year for cause.

Have completed approved credit counseling within 180 days before filing.

How We Help

Michelle Turpin P.C. guides individuals through every step of the Chapter 13 process. We:

Evaluate whether Chapter 13, Chapter 7, or an alternative strategy best fits your situation.

Prepare the petition, schedules, and Chapter 13 plan.

Negotiate with the Chapter 13 trustee and creditors, including the IRS.

Represent you at the meeting of creditors and plan confirmation hearing.