Chapter 13 is a court-supervised repayment plan that runs three to five years. It stops a foreclosure, spreads missed mortgage payments across the plan, protects property a Chapter 7 trustee would sell, and can shrink some car loans and second mortgages. The attorney fee is set by the court at $7,000, and most of it is paid inside the plan rather than before filing.
Who files Chapter 13, and why
Your mortgage is four months behind and the lender has recorded a notice of default. Or you earn too much to pass the Chapter 7 means test. Or you own a house in Mar Vista with more equity than the homestead exemption covers, and a Chapter 7 trustee would sell it. Those three situations account for most of the Chapter 13 cases we file.
The plan is a monthly payment to a trustee, who distributes it to creditors under a schedule the court confirms. Secured creditors and priority debts like recent taxes get paid in full. Unsecured creditors, the cards and the medical bills, get whatever your budget says is left over, which in many Los Angeles cases is a small fraction of the balance. When the plan ends, the rest is discharged.
It's more work than Chapter 7 and it lasts years instead of months. The trade is that you keep things Chapter 7 can't protect. Chapter 7 or Chapter 13 lays out how we decide between them on the first call.
Who is eligible
Two requirements. You need regular income, which can be wages, self-employment, a pension, Social Security, rental income or a spouse's paycheck. And your debts have to be under the limits, currently roughly $526,700 in unsecured debt and $1,580,125 in secured debt after the April 2025 adjustment.
The limits catch more Westside homeowners than you'd think. A first mortgage plus a HELOC plus a car loan can cross the secured line without much effort. The details, and what the options are if you're over, are on the Chapter 13 eligibility and debt limits page.
How the plan payment is set
Three tests set the floor of your payment, and your budget sets the rest.
| Test | What it asks | What it means for the payment |
|---|---|---|
| Disposable income | What's left after allowed expenses on the means test forms | Unsecured creditors must get at least this much per month |
| Liquidation test | What a Chapter 7 trustee would have recovered from non-exempt property | Unsecured creditors must get at least that total over the plan |
| Secured and priority claims | Mortgage arrears, car loans, recent taxes, support arrears | These are paid in full through the plan, plus the trustee's percentage |
The plan lasts 36 months if your household income is below the California median and 60 months if it's above. Most Los Angeles plans run the full 60, because stretching the arrears over five years is what makes the payment affordable. How a Chapter 13 plan payment is calculated shows how the trustees in the Central District run the numbers.
The house
The mortgage arrears go into the plan and get paid over up to 60 months, interest-free on the arrears themselves in most cases. The regular monthly mortgage payment continues outside the plan, starting the first month after filing. Miss that ongoing payment and the lender will ask the court for relief from the stay, so the case is really a test of whether the regular payment fits in your budget once the cards are gone. Curing mortgage arrears in Chapter 13 covers the mechanics.
A second mortgage or HELOC gets different treatment. If the house is worth less than the balance on the first mortgage alone, the junior lien is wholly unsecured and Chapter 13 can strip it off the property entirely. It becomes an unsecured claim, gets paid pennies with the credit cards, and the lien is released at discharge. Chapter 7 cannot do this. The valuation fight and the motion are described in stripping a second mortgage or HELOC.
Cars, taxes and the person who co-signed for you
If you bought your car more than 910 days before filing, the plan can pay the lender the car's current value instead of the loan balance, at a lower interest rate. A $22,000 balance on a car worth $13,000 becomes a $13,000 secured claim. Cars bought inside the 910 days have to be paid in full, though the rate can still come down. Car loan cramdown and the 910-day rule has the details.
Recent income taxes are priority debt. The plan pays them over up to five years with no further penalties and, usually, no interest, which is often a better deal than an IRS installment agreement. Older taxes that meet the discharge rules are treated like a credit card. See Chapter 13 and priority tax debt.
Chapter 13 also has a protection Chapter 7 lacks. The co-debtor stay stops creditors from going after a co-signer on consumer debt while the plan runs. If your sister co-signed the car loan, that matters to her. The co-debtor stay explains its limits.
When the plan stops working
Five years is a long time. People lose jobs, get divorced, have a roof fail. Most Chapter 13 cases that end early end because of missed plan payments, missed mortgage payments or unfiled tax returns, not because a creditor did anything. Our page on why Chapter 13 cases get dismissed is honest about that.
There are four tools when trouble hits, and the order matters. First, modifying the plan: lower the payment, extend the term, or suspend a few months. Second, converting the case to Chapter 7, which discharges the unsecured debt if the house is no longer worth saving. Third, a hardship discharge under section 1328(b) when circumstances you didn't cause make finishing impossible. Fourth, and last, dismissal. Call before the trustee files a motion, not after.
What it costs
The Central District sets a no-look attorney fee under its Rights and Responsibilities Agreement: $7,000 for a consumer case, $8,500 where a business is involved, figures effective May 2024. We typically collect $1,000 to $2,000 before filing and the trustee pays the rest through the plan. The court filing fee is $313. Chapter 13 attorney fees and the RARA no-look fee describes what the fee covers, and what bankruptcy costs in Los Angeles puts it beside the Chapter 7 numbers.
Naomi has been filing Chapter 13 plans in this district since 2006, in the Los Angeles, San Fernando Valley, Santa Ana, Riverside and Northern divisions. The 341 meetings are on Zoom and she attends every one. Our Beverly Hills bankruptcy practice does nothing but consumer bankruptcy.
Around month eighteen is when I get the call. The plan was fine, then the transmission went, or the hours got cut, and two payments were missed before anyone told me. That's the part I'd change if I could. A modification filed in month sixteen is routine. A motion to dismiss answered in month nineteen is a fight, and not always one we can settle. Chapter 13 forgives a lot, but it doesn't forgive silence. If the budget breaks, I'd rather hear about it the week it happens.
Questions people ask about this
How much will my Chapter 13 payment be?
It depends on your disposable income, your non-exempt property, and what secured and priority creditors have to be paid. Mortgage arrears of $30,000 over 60 months is $500 a month before anything else. Naomi runs a preliminary number on the first call from your income, arrears and debts.
Do I have to pay all my debt back in Chapter 13?
No. Secured arrears and priority debts like recent taxes get paid in full. Unsecured creditors get what your budget allows, which in many Los Angeles cases is a small percentage. Whatever isn't paid by the end of the plan is discharged.
Can I keep my house if I'm behind on the mortgage?
Yes, if you can afford the regular payment going forward plus the arrears spread over up to 60 months. The filing stops the foreclosure sale, even the morning of the sale. What you can't do is skip the ongoing payments after filing.
What happens if I can't finish the plan?
You can ask to modify it, convert to Chapter 7, or in some cases get a hardship discharge. Dismissal is the worst outcome because the creditors come back with interest added. The earlier you call, the more options exist.
Is the $7,000 fee paid up front?
No. We typically collect $1,000 to $2,000 before filing, and the trustee pays the balance out of your monthly plan payments. The fee is set by the court under the Central District's RARA schedule, not by us.
Talk it through with the attorney
If a notice of default has arrived, or you've run the means test and come up over the line, book a free video consultation and Naomi will sketch a plan payment for you on the call.