Chapter 13 ("reorganization" bankruptcy) lets Massachusetts debtors keep their assets and repay debts under a 3- or 5-year court-supervised plan. The state's median household income (~$152,000 for a family of 4) controls plan length.
Published May 6, 2026
## Chapter 13 bankruptcy in Massachusetts
**Chapter 13** — sometimes called "wage-earner bankruptcy" or "reorganization" — lets you keep your assets (including a house with a mortgage you've fallen behind on) while repaying creditors over a 3- or 5-year court-supervised plan. After the plan completes, remaining unsecured debts are discharged.
### Plan length is controlled by median income
Massachusetts's median household income (4-person family, 2024 figure: about $152,000) is the threshold:
- **Below median:** 3-year plan minimum
- **At or above median:** 5-year plan required
Median figures update every 6 months — confirm the current number with your bankruptcy attorney.
## Who Chapter 13 is for
Chapter 13 is the right tool when:
- **You're behind on a mortgage** and want to keep the house — Chapter 13 lets you cure arrears over 3-5 years
- **You're behind on a car loan** — "cramdown" lets you reduce the loan to current car value if the loan is over 910 days old
- **You make too much for Chapter 7** — failed the means test
- **You have non-dischargeable priority debts** (recent taxes, child support arrears) you can pay over time
- **You have non-exempt assets** you'd lose in Chapter 7
- **You filed Chapter 7 recently** (8-year wait between Chapter 7 discharges)
- **You want to discharge debts that survived a prior Chapter 7** (Chapter 20 — Chapter 7 followed by Chapter 13)
## Eligibility limits
- **Debt limits** — As of 2024, total debt under ~$2.75M (combined secured and unsecured) for cases filed after June 21, 2024 — Congress allowed the higher SBRA limits to sunset partially
- **Regular income** required — wage earners, self-employed, business owners, retirees with pension/Social Security
- **Tax returns filed** — must be current on the past 4 years
- **Credit counseling** — required pre-filing certificate
- **No prior dismissal** in past 180 days for cause
## How the plan works
Your monthly plan payment goes to a Chapter 13 trustee, who distributes to creditors in priority order:
1. **Secured debts being cured** (mortgage arrears, car loans)
2. **Trustee fees** (typically 5-10% of plan payments)
3. **Priority unsecured** (recent taxes, domestic-support arrears)
4. **General unsecured** (credit cards, medical, signature loans) — receives whatever's left, often pennies on the dollar
## What discharges at the end
After successful completion of the plan:
- Most unsecured debt that wasn't paid in full is discharged
- Some debts survive (student loans, recent taxes, domestic support, criminal restitution, fraud-based debts)
- Secured debt is discharged only if the collateral is surrendered or the loan is fully cured
Discharge is broader than Chapter 7 in some ways — Chapter 13 can discharge certain marital-property debts and certain criminal fines that Chapter 7 cannot.
## What can go wrong
Most Chapter 13 cases that fail do so because:
- **Debtor stops making plan payments** — plan dismissed, creditors come after you again
- **Loss of income mid-plan** — plan modification possible but limited
- **Failure to maintain post-petition payments** (mortgage, car, support) — relief from stay granted to creditors
- **Failure to file annual income/tax certifications**
- **New debt incurred without trustee approval**
Only about 1/3 of Chapter 13 cases reach discharge — most are dismissed or converted.
## Costs
- **Filing fee:** $313 (federal); installment payment allowed
- **Attorney fees:** typically $3,500-$6,000 (mostly paid through the plan, not upfront)
- **Credit counseling and debtor education:** ~$50 each
- **Trustee fees:** 5-10% of plan payments (paid by the debtor, distributed to creditors)
## Chapter 7 vs Chapter 13 quick compare
| | Chapter 7 | Chapter 13 |
|---|---|---|
| Length | 3-6 months | 3-5 years |
| Income requirement | Must pass means test | Must have regular income |
| Asset treatment | Non-exempt sold by trustee | Keep all assets |
| Mortgage cure | No | Yes |
| Frequency | 8-year wait | 2-year wait between discharges |
| Co-debtor protection | No | Yes (limited) |
| Discharge of fraud-based debt | No | No (similar exception) |
## What you should do
Chapter 13 cases require ongoing trustee oversight for years — DIY is rarely realistic. Massachusetts bankruptcy attorneys typically charge flat fees that are mostly paid through the plan rather than upfront — making representation far more accessible than it sounds. Most offer free initial consultations to assess whether Chapter 7 or Chapter 13 is the right tool.
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*This guide is general information about federal bankruptcy law and Massachusetts-specific exemptions as of early 2026 and is not legal advice. Median income thresholds, debt limits, and procedural rules update every 1-3 years. Talk to a licensed Massachusetts bankruptcy attorney about your specific situation.*
This guide is for general information only and does not constitute legal advice. Laws change and outcomes depend on your specific situation — talk to a licensed attorney before acting on anything you read here.