Chapter 13: Keep What You Have. Pay What You Can.

Chapter 13 can stop a foreclosure, halt the garnishments, and let you keep your home and car while you catch up. It reorganizes your debts into a single, court-protected repayment plan that runs three to five years, and when the plan is complete, the remaining unsecured debt is discharged. You pay your creditors what your income actually allows, not what they demand.

For people with regular income, significant assets to protect, or a mortgage in crisis, Chapter 13 is often the option that actually solves the problem rather than postponing it.

Why Clients Choose Chapter 13:

• Save a home from foreclosure
• Stop wage garnishments
• Catch up on mortgage arrears
• Keep nonexempt assets
• Consolidate debts into one payment
• Reduce stress immediately through the automatic stay

At Lakelaw, David P. Leibowitz brings more than 50 years of bankruptcy experience, and the firm has served the Chicago area for over 25 years. We know this court and the Northern District trustees, and we know how to build a plan that gets confirmed.

The moment you file, the automatic stay takes effect (11 U.S.C. § 362). It is a federal court order, and it halts essentially all collection activity at once. Over the life of your plan, Chapter 13 can do considerably more than that.

Stop foreclosure and cure your mortgage arrears. If you are behind, Chapter 13 lets you spread the missed payments across the full three-to-five-year plan while you resume your regular monthly payment going forward (§ 1322(b)(5)). The lender must accept a plan that meets the statute, and the foreclosure stops the day you file.

Eliminate a second mortgage or home equity loan. If your first mortgage balance is more than the home is worth, a junior lien such as a second mortgage or HELOC may be stripped off entirely and treated as unsecured debt, which can be discharged at the end of your plan. This is one of the most powerful tools in bankruptcy law, and most homeowners do not know it exists.

Protect your car. Chapter 13 stops repossession immediately. If your car was already repossessed but you file within a short window, we may be able to force its return. If your car loan is more than 910 days old, we may be able to reduce the interest rate or cram down the balance to the vehicle's actual value.

Protect equity that Chapter 7 would expose. If your equity exceeds Illinois exemptions, Chapter 7 would require the trustee to liquidate it. Chapter 13 lets you keep the property and instead pay creditors the equivalent of what they would have received in a liquidation, spread over your plan.

Discharge debts Chapter 7 cannot. Property settlements from divorce, certain older tax debts, and some other obligations that survive Chapter 7 can be discharged or paid through a Chapter 13 plan.

Stop garnishments, bank freezes, and lawsuits. The automatic stay halts all of them when you file. If a garnishment was collected within 90 days before filing, we may be able to recover those funds.

Chapter 13 also reaches some particularly Chicago situations:

• Parking-ticket and red-light-camera debt can be paid through a Chapter 13 plan, and a driver's license suspended over unpaid tickets or tollway violations can often be reinstated through the bankruptcy process.
• Cook County property-tax-lien situations can sometimes be addressed through Chapter 13.
• The Illinois Mortgage Foreclosure Law sets a specific sheriff's-sale timeline. Chapter 13 stops the process wherever you are in it, though acting sooner always gives us more room to work.

To file Chapter 13, you must meet four conditions (11 U.S.C. § 109(e)):

1. You are an individual. Corporations, LLCs, and partnerships cannot file Chapter 13; they use Chapter 11.
2. You have a regular source of income. Wages, self-employment income, rental income, Social Security, or any other predictable source qualifies. It does not have to be a traditional paycheck.
3. Your total debt is below the Chapter 13 limits. Chapter 13 sets separate caps on your debts, adjusted for inflation every three years. For cases filed between April 1, 2025 and March 31, 2028, the limits are $526,700 in noncontingent, liquidated unsecured debt and $1,580,125 in secured debt. (A temporary single combined limit of $2.75 million was in effect until it expired in June 2024.) Because these thresholds change, we confirm the figures that apply to your filing date.
4. You have not had a prior discharge too recently. After a Chapter 7 discharge, you must wait four years before a Chapter 13 can discharge your debts; after a prior Chapter 13 discharge, you must wait two years (§ 1328(f)).

If your debts exceed the Chapter 13 limits, Chapter 11, including Subchapter V for small businesses, may be the right path. We will discuss it with you.

At the heart of Chapter 13 is a repayment plan: a court-approved schedule of monthly payments to the Chapter 13 trustee over 36 to 60 months, which the trustee distributes to your creditors by priority.

How much you pay is based on your disposable income, what is left after allowed living expenses, taxes, and secured debt payments such as your mortgage and car. If your income is above the Illinois median, we use the means-test formula; if it is below, we work from your actual projected budget.

What creditors receive has to meet certain minimums:
- Secured creditors receive the value of their collateral
- Priority unsecured creditors, such as recent taxes and support arrears, are paid in full
- General unsecured creditors, such as credit cards and medical bills, receive whatever is left, which in many plans is a fraction of the balance and sometimes nothing

Unsecured debt left unpaid at the end of the plan is discharged. You owe nothing further.

In practice, you live on a budget for the length of the plan, make your monthly payment, and avoid significant new debt without court approval. Most people find that discipline uncomfortable at first and genuinely useful by the end. It works as a structured financial reset.

If you are unsure which chapter fits, our Chapter Eligibility Quiz takes about five minutes and gives you a starting point before your consultation.

Step 1: Consultation. We review your income, debts, assets, and goals. If Chapter 13 is the right path, we explain what your plan will likely look like and what it will cost.

Step 2: Credit counseling. A brief, federally required course, available online and usually finished in about an hour, must be completed before filing.

Step 3: Case preparation. We prepare the petition, the schedules, and the proposed Chapter 13 plan. The plan is the heart of the case, and we build it to meet every legal requirement and to be confirmed.

Step 4: Filing. Your case is filed in the Northern District of Illinois (Dirksen Federal Building). The automatic stay takes effect immediately, and foreclosures, garnishments, repossessions, and creditor calls must stop.

Step 5: 341 Meeting of Creditors. About 30 to 45 days after filing, you attend a short meeting with the Chapter 13 trustee by video. The trustee reviews your income, expenses, and plan. Creditors may attend but usually do not. We prepare you thoroughly.

Step 6: Confirmation hearing. The court holds a hearing to approve your plan. We handle it, and if creditors object, we address the objections. Once confirmed, the plan binds every creditor, even those who objected (§ 1327).

Step 7: Monthly payments. You pay the trustee each month. We stay available throughout the plan if your circumstances change, because plans can often be modified when life happens, whether that is job loss, a medical emergency, or a raise.

Step 8: Discharge. When you complete the plan, the court enters your discharge and wipes out the remaining unsecured debt. You also complete a debtor education course before the discharge is entered.

David P. Leibowitz is also admitted in Wisconsin and represents Wisconsin filers. Wisconsin cases are filed in the U.S. Bankruptcy Court for the Eastern or Western District of Wisconsin, and Wisconsin sets its own exemption amounts and procedures, which differ from Illinois. If you live in Wisconsin, we will walk you through the rules that apply to you.

For most Chapter 13 cases, Lakelaw charges a flat fee of $5,500, covering the full case from the initial consultation through plan confirmation and discharge. In Chapter 13, part of the attorney fee can be paid after the case is filed, so you do not have to come up with the entire amount before we file.

The court filing fee is $313. We give you a clear fee quote at your initial consultation, with no surprises.