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How a Chapter 13 Works

How a Chapter 13 Works in Raleigh, NC

A Chapter 13 in Raleigh, NC is a reorganization of your debt.

It will stop foreclosures and the repo man in his tracks. In chapter 13 bankruptcy, you will pay the Trustee all your “available” money for 3 to 5 years (generally) and he will pay your debts that are included in the bankruptcy.

At the completion, all eligible unsecured debt that is left over is discharged. Some things can affect your discharge, such as being behind on a domestic support payment, having received a discharge in a case filed under chapter 7 (or 11 or 12) during the 4-year period preceding the filing date of the chapter 13, or having received a discharge in a prior chapter 13 filed within two years prior to filing the new case.

Sample Chapter 13 Bankruptcy


Jon and Tammy Jones have 3 children, and bring home an income of $2,165 monthly. Their monthly bills, before filing a Chapter 13, were $1955 as shown below:



Monthly Payments Balance
Home Loan
(4 months behind)
$510/month $65,000
’07 Ford Van Loan $345/month $12,000
’06 Chevy Car Loan $220/month $9,000
Bank Loan $190/month $6,800
Visa $60/month $4,900
Mastercard $300/month $8,700
Finance Company $120/month $4,500
Medical Bills $60/month $1,700
Department Store $150/month $3,600
Total Payments $1955 / month


If Jon and Tammy file a Chapter 13 Bankruptcy Reorganization to stop the sale of their home, and if Jon and Tammy have average living expenses of $1,345 per month, this may happen:

  1. The monthly payment for Jon and Tammy would be $310 per month for 57 months, the first of the following month. The payment of $310 would catch up the house payments, pay off both vehicles, and take care of the bank loan, the two credit cards, the finance company, the medical bills, and the department store debt.
  2. In addition to the $310 payment, Jon and Tammy must start back making the $510 house payments on the first of the following month, for a total of $820 in monthly payments.
  3. After Jon and Tammy make their $310 payment, and the $510 house payment, they will have $1,345 per month for living expenses (food, electricity, insurance, car expenses, recreation, medical, household supplies, clothing, telephone, cable, etc.).
  4. Under Jon and Tammy’s circumstances, the unsecured creditors were paid 1% of their balances, and the other 99% of their balances were discharged; further, Jon and Tammy were able to get titles to their vehicles by only paying the actual value of the vehicles.

Chapter 13:


Before Filing Chapter 13: After Filing Chapter 13:
Net Income:  $2,165 Net Income:  $2,165
Monthly Payments:  $1,955 Monthly Payments:  $820
Living Expenses:  $1,345 Living Expenses:  $1,345
Short Each Month:
Short Each Month: