What are the requirements for filing a Chapter 13 bankruptcy?

If you are filing a Chapter 13 bankruptcy, a proposed repayment plan must also be submitted.  After reasonable monthly expenses have been paid, how much money will you have left over to put toward your outstanding bills?  And how will this money be divided up among those you owe?  Priority claims (such as taxes and back child support) must be paid in full; unsecured debts (like credit card debt and medical bills) are usually paid in part.  Depending upon the facts in each case, unsecured debts can be paid off for as little as pennies on the dollar!

In addition to the general requirements listed above, the repayment plan must pass three tests:

1. It must be proposed in good faith.
    

2. Unsecured creditors must be paid at least as much as if a Chapter 7 bankruptcy had been filed.  Generally, this is the value of all the nonexempt property you own (see California Bankruptcy Exemptions).
    

3. All disposable income must be paid into the plan for at least three years (you may use up to five years in order to meet the second test that you pay at least as much as in a Chapter 7).

If you file a Chapter 13, you must begin making your plan payments to the Chapter 13 Trustee within 30 days.  Generally the first payment is made directly to the Chapter 13 Trustee and the subsequent plan payments will be withdrawn directly from your paycheck at work under a wage withholding order from the Bankruptcy Court.