Virginia Chapter 13 Bankruptcy Guide

By John G. Merna, Esq. | Last Reviewed: June 2026 | The Merna Law Group, P.C.

Chapter 13 bankruptcy — formally titled Adjustment of Debts of an Individual with Regular Income under Title 11 U.S.C. §§ 1301–1330 — is the reorganization chapter of the Bankruptcy Code. Where Chapter 7 eliminates debt, Chapter 13 restructures it. You keep all your property and repay what you can afford through a court-supervised plan, typically over three to five years.

For Virginia homeowners facing foreclosure, vehicle owners behind on payments, and anyone whose income is too high for Chapter 7 or who needs to repay non-dischargeable obligations like taxes or support arrears, Chapter 13 is often the right answer. This guide explains exactly how it works, whether you qualify, what the process looks like, and what to expect at the end.

What Is Chapter 13 Bankruptcy?

Chapter 13 is sometimes called the wage earner’s plan because it requires a regular, predictable income — from employment, self-employment, Social Security, pension, or other reliable source — to fund a monthly repayment plan. Unlike Chapter 7, which concludes in months, Chapter 13 is an active three-to-five year court case during which you make monthly payments to a bankruptcy trustee, who distributes funds to your creditors according to a court-approved plan.

The core benefit is that you do not surrender any property. As long as your plan is confirmed by the court and you complete all required payments, you keep your home, your car, your retirement accounts, and everything else — while eliminating or significantly reducing what you owe.

At the end of a successfully completed Chapter 13 plan, the court issues a discharge that eliminates most remaining unsecured debt, giving you a clean financial start after years of structured repayment.

Chapter 7 vs. Chapter 13 — Which Is Right for You?

The right chapter depends on your income, the type of debt you carry, whether you are behind on secured debt, and what you are trying to accomplish:

Who Qualifies for Chapter 13 Bankruptcy in Virginia?

To file Chapter 13, you must meet three basic requirements under 11 U.S.C. § 109(e):

1. Regular Income

You must have a regular source of income sufficient to fund your repayment plan. This does not mean a traditional paycheck — Social Security, disability benefits, pension income, rental income, and self-employment income all qualify, as long as the payments are consistent and predictable.

2. Debt Below the Statutory Limit

Federal law caps the total debt you may carry and still use Chapter 13. The limits apply separately to secured and unsecured noncontingent, liquidated debt under 11 U.S.C. § 109(e). These limits adjust periodically and have been amended by Congress multiple times. Because the threshold changes, we do not publish specific figures here.

Current debt eligibility thresholds are published at uscourts.gov. Our attorneys verify your eligibility at the time of your consultation — call 1-800-662-8813 for a free review.

3. No Recent Dismissal

If a prior bankruptcy case was dismissed within 180 days because you failed to comply with court orders or voluntarily dismissed after a creditor sought relief from the automatic stay, you may face restrictions on refiling (11 U.S.C. § 109(g)).

How the Chapter 13 Repayment Plan Works

The repayment plan is the heart of every Chapter 13 case. It specifies how much you will pay each month, which creditors receive what, and in what order.

Plan Length — 3 Years or 5 Years

If your current monthly income is below Virginia’s applicable median for your household size, your plan will generally run for three years. If your income is above the median, your plan will generally run for five years. In either case, the plan cannot exceed five years (11 U.S.C. § 1322(d)). Current Virginia median income figures are published at justice.gov/ust and update periodically.

How Creditors Are Paid

Chapter 13 pays creditors in a legally defined order of priority:

• Priority claims first — domestic support obligations, most recent taxes, and administrative costs must be paid in full through the plan.
• Secured creditors next — mortgage arrears, car loan payments, and other secured debt are addressed based on the value of the collateral and the nature of the claim.
• Unsecured creditors last — credit cards, medical bills, and personal loans receive whatever remains of your disposable income after priority and secured payments. In many plans, unsecured creditors receive only a fraction of what is owed, or nothing at all.

The Disposable Income Requirement

Your plan must commit all projected disposable income to repaying creditors for the life of the plan (11 U.S.C. § 1325(b)). Disposable income is your monthly income minus allowed living expenses, calculated using IRS expense standards. Our attorneys calculate this precisely for every client before a plan is filed.

The Best Interests of Creditors Test

Your plan must also satisfy the best interests of creditors test (11 U.S.C. § 1325(a)(4)). Unsecured creditors must receive at least as much through your Chapter 13 plan as they would have received in a Chapter 7. In practice, your non-exempt property value sets a floor for what unsecured creditors must be paid.

What Chapter 13 Can Do That Chapter 7 Cannot

Save Your Home From Foreclosure

This is the single most common reason Virginia homeowners file Chapter 13. If you are behind on your mortgage — even if a foreclosure sale is already scheduled — filing Chapter 13 stops the foreclosure immediately through the automatic stay. Your plan spreads the mortgage arrears over three to five years, allowing you to bring the loan current while keeping your home. As long as you make your ongoing mortgage payment plus the plan payment for arrears, the lender cannot foreclose.

Strip a Second Mortgage (Lien Stripping)

If you have a second mortgage or home equity line of credit, and the value of your home is less than what you owe on the first mortgage, Chapter 13 may allow you to strip the second lien entirely (11 U.S.C. § 1322(b)(2)). The stripped lien is reclassified as unsecured debt — typically discharged at the end of the plan or paid only partially. This can eliminate a substantial mortgage obligation on an underwater property.

Reduce a Car Loan (Cramdown)

If you have owned your vehicle for more than the applicable period before filing and owe more than the car is worth, Chapter 13 may allow you to reduce the loan balance to the vehicle’s current fair market value and often lower the interest rate as well (11 U.S.C. § 1325(a)(5)). The remaining balance above market value is reclassified as unsecured debt.

Repay Non-Dischargeable Debt Affordably

Some debts cannot be eliminated in any bankruptcy — recent income taxes, child support arrears, spousal support. Chapter 13 lets you repay these obligations through the plan at an affordable monthly amount, with collection actions halted for the entire plan period.

File After a Recent Chapter 7

If you received a Chapter 7 discharge and face financial difficulty again before the eight-year waiting period has passed, Chapter 13 is available sooner. You can file Chapter 13 as soon as four years after a prior Chapter 7 discharge and still receive a full Chapter 13 discharge (11 U.S.C. § 1328(f)). Even before four years, the automatic stay and plan structure still provide meaningful protection.

The Automatic Stay — Immediate Relief Upon Filing

The moment a Chapter 13 petition is filed, the automatic stay under 11 U.S.C. § 362 takes effect — no court hearing, no advance notice to creditors. The automatic stay stops:

• Foreclosure proceedings — even a sale scheduled for the same day can be halted
• Wage garnishments — your full paycheck is protected immediately
• Vehicle repossessions
• Lawsuits and judgment enforcement
• All creditor phone calls, letters, and collection attempts
• Bank levies and account freezes

The stay remains in effect for the entire life of your Chapter 13 case — up to five years — as long as you comply with your plan obligations.

The Chapter 13 Process in Virginia — Step by Step

A typical Merna Law Chapter 13 case moves through these stages. Every step can be completed without leaving your home through our virtual filing program.

Step 1 — Free Consultation

We review your income, debts, property, and goals by phone or video call — or in person at our Virginia Beach, Newport News, or Richmond offices if you prefer. We determine whether Chapter 13 or Chapter 7 is the better fit, estimate your monthly plan payment, and walk you through what to expect. This consultation is free and completely confidential.

Step 2 — Credit Counseling

Federal law requires completion of an approved credit counseling course within 180 days before filing (11 U.S.C. § 109(h)). This takes approximately one to two hours and can be completed online. We provide clients with a current list of court-approved providers.

Step 3 — Document Collection and Plan Preparation

We gather your pay stubs, tax returns, bank statements, mortgage statements, vehicle information, and creditor list. All documents can be submitted securely through our online portal — no office visit required. We then prepare your petition and proposed repayment plan, calculating the monthly payment and distribution across creditor classes.

Step 4 — Filing

Your petition and proposed plan are sent to you electronically for review and digital signature, then filed with the Eastern District of Virginia Bankruptcy Court (EDVA). The automatic stay activates immediately. You begin making plan payments to the Chapter 13 trustee within 30 days of filing, even before the plan is formally confirmed (11 U.S.C. § 1326(a)).

Step 5 — The 341 Meeting of Creditors

Approximately 21 to 50 days after filing, you attend a brief meeting before the Chapter 13 trustee (11 U.S.C. § 341). This is not a court hearing — no judge is present. The meeting is conducted by phone or video and typically lasts five to fifteen minutes. Our attorneys prepare you thoroughly and can be present with you remotely.

Step 6 — Plan Confirmation

The court holds a confirmation hearing to determine whether your plan meets all legal requirements. Our attorneys address any creditor objections and, if necessary, modify the plan to obtain confirmation. Once confirmed, the plan becomes a binding legal order on you and all your creditors.

Step 7 — Plan Completion and Discharge

You make monthly plan payments for the full plan term. Once all payments are complete and other requirements are satisfied, the court issues a discharge eliminating most remaining unsecured debt (11 U.S.C. § 1328). The Chapter 13 discharge is broader than Chapter 7 in some respects, covering certain debts that Chapter 7 does not discharge.

A full month-by-month timeline is available on our Chapter 13 Timeline page.

What If My Financial Situation Changes During the Plan?

Life rarely stays the same for three to five years. Chapter 13 has built-in flexibility:

• Job loss or income reduction: You may be able to modify your plan to reduce monthly payments (11 U.S.C. § 1329). In hardship situations, a hardship discharge may be available without full plan completion (11 U.S.C. § 1328(b)).
• Unexpected expenses: The court can approve plan modifications for significant unforeseen expenses during the plan period.
• Income increase: If your income increases substantially, the trustee may seek to modify the plan to increase payments.
• Converting to Chapter 7: If you can no longer maintain payments and now qualify for Chapter 7, you have the right to convert at any time (11 U.S.C. § 1307(a)).

What Does Chapter 13 Discharge — and What Survives?

A completed Chapter 13 plan discharges most remaining unsecured debt. Chapter 13’s discharge is broader than Chapter 7 in certain respects — it can discharge some debts that Chapter 7 cannot, including certain property settlement obligations from divorce that are not support (11 U.S.C. § 1328(a)).

Debts that survive a Chapter 13 discharge include:

• Ongoing domestic support obligations — child support and alimony that continue to accrue after filing
• Most student loans
• Debts from fraud, intentional misconduct, or willful injury
• Certain criminal fines and restitution
• Debts from a DUI causing death or personal injury
• Long-term secured obligations that extend beyond the plan, such as a primary mortgage

Common Mistakes Virginia Chapter 13 Filers Make

• Underestimating the plan payment. Lowballing income or inflating expenses leads to confirmation problems. Full and accurate financial disclosure is essential.
• Falling behind on plan payments. Missing even one or two payments can lead to dismissal. Contact our office immediately if you anticipate difficulty — modifications are far easier to obtain before you fall behind.
• Falling behind on the ongoing mortgage payment. The plan covers arrears but does not replace the regular monthly mortgage. You must continue paying your mortgage directly to the lender during the plan.
• Incurring new significant debt without court approval. Taking on new debt during a Chapter 13 case typically requires trustee or court approval (11 U.S.C. § 1305).
• Failing to file required tax returns. Federal law requires Chapter 13 debtors to file all required tax returns during the plan period (11 U.S.C. § 1308). Failure to do so can result in dismissal.

Frequently Asked Questions — Chapter 13 Bankruptcy in Virginia

Will Chapter 13 save my home from foreclosure?

Yes — if you file before the foreclosure sale is completed. The automatic stay under 11 U.S.C. § 362 stops the foreclosure immediately upon filing. Your plan then catches up the missed mortgage payments over three to five years. As long as you make both your ongoing mortgage payment and your plan payment, the lender cannot proceed with foreclosure.

Do I have to come into your office?

No. The entire Chapter 13 process — from free consultation through plan completion — is available without ever visiting our offices. Consultations are by phone or video, documents are submitted through our secure online portal, signing is done electronically, and the 341 Meeting is conducted by phone or video. Visit our virtual filing page for details.

How much will my monthly plan payment be?

Your plan payment is based on your disposable income after allowed living expenses. There is no single answer because every household’s income and expenses are different. Call 1-800-662-8813 for a free consultation and we will calculate a realistic estimate for your specific situation.

Can I keep my car in Chapter 13?

Yes. You keep your vehicle by continuing to pay for it through the plan. If you owe more than the car is worth and have owned it for the required period before filing, you may also be eligible to reduce the loan balance to the vehicle’s current fair market value through a cramdown, which can significantly lower your monthly payment.

Can I file Chapter 13 if my income is too high for Chapter 7?

Yes. Chapter 13 has no income ceiling. As long as you have regular income to fund a plan and your total debt is within the statutory limit under 11 U.S.C. § 109(e), you can file Chapter 13 regardless of how much you earn.

What happens if I cannot complete my Chapter 13 plan?

You may be able to modify the plan to reduce payments. You may be able to convert to Chapter 7. In genuine hardship cases, a hardship discharge may be available (11 U.S.C. § 1328(b)). Our attorneys will work through every available option before a dismissal occurs.

How does Chapter 13 affect my credit?

A Chapter 13 filing appears on your credit report for up to seven years from the filing date — three years less than a Chapter 7. Consistent monthly plan payments over the plan period help establish a pattern of responsible repayment, which can accelerate credit recovery.

How soon can I file Chapter 13 after a prior bankruptcy?

You can file Chapter 13 at any time — the automatic stay and plan benefits apply immediately. To receive a full Chapter 13 discharge, you must wait at least four years after a prior Chapter 7 discharge or two years after a prior Chapter 13 discharge (11 U.S.C. § 1328(f)).

Ready to Take the First Step? Free Consultation — No Office Visit Required

If you are facing foreclosure, a repossession, wage garnishment, or debt you cannot manage, a free conversation with Merna Law costs you nothing and could save your home. Our attorneys have helped thousands of Virginia residents in Virginia Beach, Newport News, Richmond, Norfolk, Chesapeake, Hampton, and surrounding communities keep their property and regain financial stability through Chapter 13.

We offer free consultations by phone or video — or in person at our three Virginia offices. Every step of the process, from the initial call through the final discharge, can be completed entirely from your home through our virtual filing program. No office visit is ever required.

Call 1-800-662-8813 or book online. Everything you share is completely confidential.

Last reviewed by John G. Merna, Esq. | June 2026 | The Merna Law Group, P.C. is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.