Chapter 13

Chapter 13 Bankruptcy — Reorganize, Catch Up, Keep What Matters

A 3–5 year repayment plan that stops foreclosure, protects your assets, and gets you back on your feet.

What Chapter 13 Is

Chapter 13 is "reorganization bankruptcy." Instead of liquidating, you commit a portion of your monthly income to a court-supervised repayment plan that runs 3 to 5 years. In exchange, you keep your assets, catch up on missed payments, and receive a discharge of remaining qualifying debt at the end of the plan.

Who Chapter 13 Is For

Chapter 13 is built for people with regular income who want to save a home, car, or other asset they can't fully protect under Chapter 7. It's also a good fit for filers who don't pass the Chapter 7 Means Test, or who have priority debts (like recent taxes) that survive Chapter 7 anyway.

Saving Your Home from Foreclosure

The minute Chapter 13 is filed, the automatic stay stops the foreclosure sale — including sales scheduled for the very next day. The arrearage (missed payments) gets folded into your plan and paid back over the life of the plan, while you stay current on the regular mortgage payment going forward.

How the Repayment Plan Works

Your income

Disposable income calculated

The trustee

One monthly payment to the Chapter 13 trustee

Creditors

Trustee distributes — priority debts first, unsecured last

Plan Payment Estimator

Estimate Your Chapter 13 Monthly Payment

A rough estimate of what your trustee payment might look like. Real plans factor in income, unsecured creditor projections, and Michigan local rules.

Mortgage arrears to cure: $8,000

Car loan to pay through plan: $6,000

Priority debt (recent taxes, support): $2,000

Plan length: 5 years

Estimated monthly plan payment

$290

Based on $16,000 repaid over 60 months (incl. ~8% trustee fee).

Chapter 13 vs. Chapter 7

Factor	Chapter 7	Chapter 13
Timeline	3–6 months	3–5 years
Asset protection	Up to exemption limits	Keep all assets via plan
Income requirement	Must pass Means Test	Need regular income
Debt limits	None	Caps on secured/unsecured debt
Effect on mortgage	Doesn't catch up arrears	Cures arrears over plan
Credit impact	10 years on report	7 years on report

The Chapter 13 Process

1Free consultation with Robert
2Complete required credit counseling
3File the petition — automatic stay stops foreclosure
4Repayment plan proposed (within 14 days of filing)
5Confirmation hearing
63 to 5 year plan payments to the trustee
7Discharge of remaining qualifying balances

The Three Power Tools of Chapter 13

Chapter 13 isn't just a slower Chapter 7 — it has unique tools that can save homeowners and vehicle owners tens of thousands of dollars over the life of the plan.

Mortgage cure

Behind on the mortgage? The arrearage gets folded into your plan and paid back over 36–60 months while you stay current on the going-forward payment. The lender cannot foreclose during the plan.

Lien stripping

If your home is worth less than the first mortgage balance, a wholly underwater second mortgage or HELOC can be 'stripped' — reclassified as unsecured and discharged at the end of the plan.

910-day cramdown

Bought your car more than 910 days ago and owe more than it's worth? Chapter 13 can reduce the loan balance to the vehicle's actual value and lower the interest rate.

Real Washtenaw County Chapter 13 Cases

Composite examples — details changed for privacy — that show how the plan structure actually plays out in practice.

Homeowner couple in Ypsilanti, $14k behind on mortgage

Problem: Sheriff's sale was scheduled in 11 days. Combined household income $78k. Wanted to keep the home for their kids' school district.

Solution: Filed Chapter 13. Sale stopped immediately. $14k arrearage spread across a 60-month plan at ~$235/month, on top of the regular mortgage. Home saved.

Single dad in Ann Arbor with above-median income

Problem: Earned too much for Chapter 7 under the Means Test. $52k in credit cards and a wage garnishment about to start.

Solution: 60-month Chapter 13 plan paying ~38¢ on the dollar to unsecured creditors. Garnishment stayed. Discharge at year 5 wiped the rest.

Saline homeowner with an underwater HELOC

Problem: First mortgage balance exceeded current home value. Second mortgage of $41k was wholly unsecured. Wanted to keep the home long-term.

Solution: Chapter 13 with a successful lien-strip motion. The $41k HELOC was discharged at the end of the plan; the lien was removed from the title.

What Your Plan Payment Actually Covers

One monthly payment to the Chapter 13 trustee — and the trustee distributes it according to a court-confirmed priority order:

Priority 1

Trustee fee (typically 7–10% of plan payments) and any administrative costs

Priority 2

Mortgage arrears, recent unpaid taxes, child support and alimony arrears

Priority 3

Secured creditors with cramdown loans (e.g., the reduced car payment)

Priority 4

General unsecured creditors (credit cards, medical bills) — paid pro-rata from whatever remains

Risks and How to Avoid Them

Missed plan payments leading to dismissal

Robert can file a plan modification if your income drops mid-plan.

New debt without trustee approval

Need a new car loan during the plan? Robert files the motion for you.

Failure to file annual tax returns

Required during the plan. Robert reminds clients each spring.

Income increases not reported

A significant raise may modify your plan payment — voluntary disclosure protects you.

Michigan-Specific Notes

In Michigan, Chapter 13 filers can sometimes strip wholly underwater second mortgages and HELOCs — a powerful tool for homeowners in Ypsilanti and Ann Arbor whose home values dipped after refinancing. Cramdown on car loans older than 910 days can also significantly reduce monthly payments. The Eastern District of Michigan has experienced trustees who run a tight, fair process — Robert has worked with them for years.

Chapter 13 FAQs

Your plan payment is based on your disposable income (income minus reasonable expenses), the value of any non-exempt assets, and any priority debts (taxes, support arrears) that must be paid in full over the plan.

Find Out if Chapter 13 is Right for You

Robert will walk through your situation honestly — for free.

Call (734) 662-1590

Talk with Robert

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