Chapter 13 Bankruptcy: Understanding Repayment Plans and Eligibility
Financial hardship can strike anyone unexpectedly. Medical bills pile up, job loss hits hard, or overwhelming debt from credit cards and loans leaves you feeling trapped and anxious. It's a tough spot, and you're not alone—many people in Louisiana face similar struggles every day. The good news is that options exist to help you regain control.
At Hoke Law Firm in Baton Rouge, Louisiana, we guide clients through Chapter 13 bankruptcy. Led by experienced lawyer Robert W. Hoke, we serve clients in Baton Rouge and neighboring areas, including New Orleans and Lafayette.
If you're dealing with debt and want to keep your assets while creating a manageable payment schedule, we can help. Call us for a consultation today.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, often called a wage earner's plan, allows individuals with regular income to reorganize their debts. Instead of liquidating assets, as in Chapter 7, you propose a repayment plan to repay all or part of your debt over three to five years.
This type of bankruptcy halts foreclosure, repossession, and creditor harassment immediately through an automatic stay. You make one monthly payment to a court-appointed trustee, who then distributes the funds to your creditors. At the end, remaining eligible debts get discharged, giving you a fresh start.
Many choose Chapter 13 because it lets you catch up on missed mortgage or car payments while protecting your property. It's a powerful tool for those with steady incomes who need time and structure to manage their debts.
Who Qualifies for Chapter 13 Bankruptcy?
Not everyone can file for Chapter 13 bankruptcy, but the requirements make it accessible for many working individuals. You need a regular income from wages, self-employment, or other reliable sources. This income must be sufficient to cover your living expenses plus the proposed plan payments.
Debt limits apply as well. As of 2026, your unsecured debts (like credit cards and medical bills) can’t exceed $526,700, and secured debts (like mortgages and car loans) can’t go over $1,580,125.
Other factors include completing credit counseling from an approved agency within 180 days before filing and not having a recent bankruptcy dismissal due to certain issues. If you meet these criteria, Chapter 13 could be a fitting option. Working with an experienced bankruptcy lawyer helps confirm your eligibility quickly.
How Repayment Plans Work
The heart of Chapter 13 bankruptcy lies in the repayment plan. You submit a proposed plan to the court shortly after filing, detailing how you'll pay creditors over the plan's duration.
Some of the key elements in this plan include:
Priority debts: These must be paid in full, including recent taxes, child support, and alimony.
Secured debts: Arrears on mortgages or car loans accumulate over time, while ongoing payments continue.
Unsecured debts: These often receive only a portion—or sometimes nothing—depending on your disposable income.
The plan length depends on your income relative to Louisiana's median. If below the median, it's typically three years; above, it's five years. Payments are based on what you can afford after necessary expenses. The trustee oversees distributions, making sure that creditors are paid in accordance with bankruptcy rules.
Once the court confirms your plan, you will continue making payments. Successful completion leads to the discharge of remaining debts. This structured approach turns chaotic finances into something predictable. Many clients find relief in knowing exactly what they owe each month without surprise calls from collectors.
Benefits and Drawbacks of Chapter 13
Chapter 13 bankruptcy offers clear advantages, but it's important to weigh them against potential downsides. Many people turn to Chapter 13 to save their homes from foreclosure or vehicles from repossession.
The automatic stay halts these actions immediately, and the plan allows you to catch up on past-due amounts. Here are some major benefits:
Asset protection: You keep your property, including non-exempt assets that might be lost in Chapter 7.
Debt reduction: Unsecured creditors often receive less than the full amount owed, and some debts get discharged.
Credit impact: A bankruptcy remains on your report for seven years, shorter than Chapter 7's ten-year duration65.
Co-signer protection: It shields co-signers on consumer debt in the event of a default.
Here are some potential drawbacks:
Commitment required: The three- to five-year plan demands consistent payments and budgeting.
Limited flexibility: Major financial changes might require plan modifications.
Credit effects: New credit becomes harder to obtain during the plan period.
Overall, the benefits often outweigh the challenges for those who qualify and commit to the process. It provides a path to stability without starting over from scratch.
Finding Hope After Chapter 13 Bankruptcy
Facing debt doesn't mean the end—it's often the beginning of recovery. Chapter 13 bankruptcy provides a structured way to repay what you can while protecting what matters most to you.
Thousands emerge from this process with better financial habits and a clean slate. You're taking a brave step by learning about your options. Many feel isolated in their struggles, but help is available.
At Hoke Law Firm in Baton Rouge, Louisiana, we support clients in Baton Rouge, New Orleans, Lafayette, and surrounding areas. Robert W. Hoke brings years of experience to every case, helping you build a repayment plan that fits your life.
If bankruptcy seems like the right path for you, reach out to Hoke Law Firm today for assistance. Schedule a consultation to discuss how we can help you move toward financial freedom.