Bankruptcy / Chapter 13 / Is Chapter 13 Worth It

Is Chapter 13 Bankruptcy Worth It?

Written by Ben Tejes
Updated Oct 11th, 2023
This article is for informational purposes only. Ascend does not provide legal advice, and are not attorneys. If you'd like to speak with a bankruptcy attorney that serves your city, you can speak with one in a free consultation.

You may be researching Chapter 13 bankruptcy and asking yourself, "Is Chapter 13 worth it?" 

This is a common question we get at Ascend where we use data to help people compare ALL of their debt relief options (Ch 13 and 7, Debt Management, Debt Settlement and Debt Payoff Planning).  The purpose of this article is to provide you 5 things to know to determine whether Chapter 13 is worth it for you. Take the Chapter 13 worth it calculator below to compare the cost of Chapter 13 to alternatives.

So, you haven't gotten an answer to your question yet. Is a Chapter 13 bankruptcy worth it?

It may depend on your financial situation. In this article we will uncover 5 things that can be helpful to determine whether Chapter 13 bankruptcy is worth it for you. Here's what we will cover:

  • A Brief Chapter 13 Bankruptcy Overview (Skip if you already know)
  • Chapter 13 Costs and Fees (Estimate Your Payment Plan)
  • An exhaustive list of Chapter 13 Pros and Cons
  • A list of alternatives to consider if Chapter 13 is not right for you

1) A Brief Chapter 13 Bankruptcy Overview

You may have experienced a financial hardship recently and are now wondering what to do. Should you do Chapter 7 or Chapter 13 or debt settlement or debt management? You know that a Chapter 7 bankruptcy is less expensive and gets a discharge faster, but you may not qualify or your assets (such as home equity) may be above the exemption for your state.

First, if you do not not own a lot of assets or your income could be below the minimum, you may be interested to first take a Chapter 7 Means Test Calculator to estimate qualification. A Chapter 7 can cost significantly less and get a faster discharge. That said, if you likely qualify, you may want to consider the Chapter 7 Bankruptcy Pros and Cons before committing to this route.  Unfortunately most debt relief options have pros and cons, so we always recommend to decide on a solution after being full informed.

Before I move onto Chapter 13, you may not be pursuing bankruptcy because you want to keep your house or keep a vehicle. Be sure to look into federal bankruptcy exemptions and/or your state's bankruptcy exemptions because your home or vehicle's equity could be protected under the state exemption laws even if you pursue a Chapter 7 bankruptcy.

Okay, let's get back to the brief overview of a  Chapter 13 bankruptcy. A Chapter 13 Bankruptcy is also known as the "wage earners" plan. It is the second most common type of consumer bankruptcy with 286,635 filings in the year ending June 30, 2019. The Chapter 13 bankruptcy is a payment plan based bankruptcy. It enables individuals to develop a plan to pay back a portion of his/her debts. Debtors propose a plan to pay back installments to creditors in three or five years. The plan should never be longer than five years. This plan prevents creditors from pursuing collection efforts. 

We don't want to spend too much time in this article focusing on what a Chapter 13 bankruptcy is, but we did write a Chapter 13 Bankruptcy article that breaks down things that are useful to know.

2) Chapter 13 Bankruptcy Costs and Fees

You  should understand each of the three types of potential fees that you may have to pay through a Chapter 13 bankruptcy. The good news is that these fees are included in the Chapter 13 plan, but it's important to know what you are paying in that plan

To do estimate your Chapter 13 monthly payment plan cost, we built the following calculator below to help you estimate a Chapter 13 plan payment. If you are interested in the nuts and bolts behind the calculator, we use the official US bankruptcy form titled "Form Number: B 122C-2 - Chapter 13 Calculation of Your Disposable Income".

The "Is Chapter 13 Worth It" calculator also allow you to compare the cost of Chapter 13 to Chapter 7, Debt Negotiation and Debt Management.

Trustee Fees

The trustee is in charge of overseeing the administration of bankruptcy cases. There are fewer Chapter 13 trustees than Chapter 7 trustees, and the Chapter 13 trustee has a great deal of power to interpret bankruptcy law. 

As such, there is a trustee fee that is part of the Chapter 13 plan payment. Our Chapter 13 calculator takes this fee into the calculation, but you may be interested to see the Schedules of Actual Administrative Expenses of Administering a Chapter 13 Plan as of May 1, 2020. The fees are broken out by district, so you would just need to search for your state and district to see those fees.

Attorney Fees

While some people do file a Chapter 7 bankruptcy without an attorney (also known as pro se), filing a Chapter 13 bankruptcy is far less common. Why? A Chapter 13 is more complicated, so there's more work for an attorney. More work for an attorney means generally higher fees.

Pacer is a government website that provides information on bankruptcy that includes fees. While a Chapter 7 bankruptcy may cost $1,500 - $2,500, a Chapter 13 bankruptcy can commend $3,500 - $5,000.

While there are also filing fees to consider, many attorneys will lump the filing fees into the total cost above.

Administrative Fees

You may be in a district where the Chapter 13 trustee also allows a "monitoring fee". For example, the Orlando division allows a administrative fee of $20-$50 per month for work that is needed after the Chapter 13 payment plan is confirmed. Please note that these fees may be district specific, so your district may not charge these fees.

See two example plan estimates how our Chapter 13 calculator estimates fee specifically for your data:

Chapter 13 Bankruptcy Plan Estimates that Includes Fees

3) Chapter 13 Bankruptcy Pros and Cons

Pros of Chapter 13

Let's first jump into a list of advantages of a Chapter 13 Bankruptcy: 

Cons of Chapter 13

Let's go through some disadvantages of a Chapter 13 Bankruptcy: 

  • High damage to credit report and credit score
  • Possible low availability to credit after filing
  • Low payment flexibility
  • Length of time often 3 or 5 years
  • Bankruptcy on public record
  • Low to medium success rate. Check our article on Chapter 13 Dismissal Refund and Options to understand the common reasons why people do not complete a Chapter 13 bankruptcy.

4) Chapter 13 Bankruptcy Alternatives

Hopefully, you have a bit more information that will help you make the most informed decision. In this last section, let's cover the most common alternatives to a Chapter 13 bankruptcy. I won't include Chapter 7 bankruptcy because we covered that option above. 

Debt Settlement

Debt settlement is a form of debt relief where a debt settlement company or you would negotiate your debt directly with the creditor. The goal of the debt settlement company is to negotiate the total amount owed lower.

Debt settlement has had a bad reputation in the past due to debt settlement companies taking advantage of consumers. We wrote an article, "Are Debt Settlement Companies Legitimate?" because it wasn't always clear to us who we could trust to recommend to people. In fact, we have only found 2 debt settlement companies across the nation that we feel are consumer focused enough that we recommend to folks. That's not to say there aren't more good players out there, but we have found two that we feel have the consumer's best interest in mind.

This debt settlement option may be best if you are unable to make your minimum monthly payments AND you have a high dispotable income as seen from the eyes of the bankruptcy law. What does it mean "in the eyes of the bankruptcy law"? Because the bankruptcy form to estimate Chapter 13 plan payments uses Census Bureau and IRS national standards to help determine disposable income, so it's really just an estimate and you may not have that disposable income, but it can make Chapter 13 bankruptcy very expensive and debt settlement more attractive. 

In debt settlement, you may save significant amount of money and get out of debt faster than a Chapter 13 bankruptcy. You may consider reading Debt Settlement Pros and Cons for more information. Please note that we do compare debt settlement to Chapter 13 in our quick and precise calculator, so you can compare the two options apples to apples with your specific information.

Debt Payoff Planning

Debt payoff planning is the option where you line up your debt and payoff the debt as fast as possible. An individual would try to reduce expenses and put as much as possible to the debt.

You would try to put as much as possible extra to the debt to get out of debt fastest. Debt Payoff Planning is often not an option to someone experiencing a financial hardship and considering bankruptcy because the minimum payments are often out of reach. 

For this option, you may consider using a debt payoff planner to help you tackle your debt in the most efficient way and to save money on interest rates. Our calculator also allows you to compare this option.

Debt Manangement

Debt Management is through a program called Credit Counseling. Credit Counseling organizations can advise your on your debts. Most debt management companies are non-profits, but the companies do generally charge a fee.

Most of these debt management agencies will work with your creditors to lower the interest rates (example: 22% to 8%) where a debt settlement company will work with your creditors to negotiate a lower total amount due (example: $10,000 to $5,000 owed). If you are comparing debt management to debt settlement, you may consider reading our guide debt management vs debt settlement


Hopefully, you are well informed about whether a Chapter 13 is worth it for you by understanding what you need to know about a Chapter 13 bankruptcy, the fees to expect, the pros and cons of a Chapter 13 bankruptcy, your estimated Chapter 13 plan payment, and alternatives to Chapter 13 bankruptcy.

Feel free to compare your options below using our free debt relief comparison calculator or contact us directly if you have any questions about whether Chapter 13 is worth it for you. We do our best to respond within 4 hours during our business hours.