The 2% Gamble: Why Chapter 13 Bankruptcy is Not a DIY Project

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Key Points

• Only 2–3% of self-filed Chapter 13 bankruptcy cases succeed—the odds are overwhelmingly against unrepresented debtors.
• Failure isn’t just a setback—it can worsen your financial situation, leading to foreclosure, repossession, and deeper debt. Chapter 13 involves complex legal tests like the Liquidation Test, Disposable Income Test, and mortgage arrearage calculations.
• Hiring a bankruptcy attorney isn’t a luxury—it’s a strategic necessity to navigate the legal maze and secure a discharge.

The Shocking Statistic You Need to Know

If you are considering filing for Chapter 13 bankruptcy, you’re likely facing immense financial pressure. You may be looking for every way to save money, and skipping a lawyer seems like the obvious choice. You can file Chapter 13 “pro se,” meaning representing yourself.

I understand the impulse. But here is the hard truth, proven by national statistics: The success rate for individuals who file Chapter 13 without a lawyer is often cited in the 2-3% range.

To put that into perspective, if 100 people file Chapter 13 bankruptcy on their own, up to 98 of them will fail to receive a debt discharge. This failure doesn’t just put you back where you started; it often makes your financial situation worse than before you filed.

So, why is Chapter 13 such a complex legal minefield that almost guarantees failure for the unrepresented debtor?

The Legal Maze: Why Chapter 13 Requires a Navigator

The road to approval of your bankruptcy case, known as confirmation, is a constant challenge. You can learn more about the Confirmation Hearing via this short video I posted on my YouTube Channel. The Chapter 13 Trustee, sometimes referred to as the “standing trustee,” might object to your plan. The same goes for creditors. To find the trustees in your district, click here.

Chapter 13 is what lawyers call “motion practice,” meaning you are in court regularly filing motions and arguing those issues before the bankruptcy judge. If you are unrepresented, you would be arguing against experienced creditors’ attorneys. These lawyers will challenge every flaw in your plan.

For example, you have to create a payment plan that shows the court how much creditors will be paid based on your budget. The plan is complex and must satisfy numerous requirements of the U.S. Bankruptcy Code.

1. The Best Interests of Creditors Test

Your plan must propose to pay unsecured creditors (like credit card companies) at least as much as they would receive if you filed Chapter 7 (liquidation). This is commonly referred to as the Chapter 7 Liquidation Test. You can read more about the Liquidation Test here.

The Liquidation Test requires determining the value of your non-exempt assets, and that amount is paid back to unsecured creditors. More may be paid, but that is the bare minimum. If you fail to provide unsecured creditors their fair share, your plan will be rejected

2. The Disposable Income Test

This test requires you to commit all of your “projected disposable income” over the next three to five years to the plan. This is not simply your take-home pay minus expenses. It involves the infamous “Means Test” calculation, which uses IRS expense standards that are often rigid and confusingly applied. This also requires comparing Schedule I (Income) to Schedule J (Expenses). You can use this link to learn more about filing for bankruptcy.

Creditors’ attorneys routinely object when it comes to the Disposable Income Test, arguing that expenses are too high and that the debtor can afford to pay back more “into the plan.” Getting this calculation wrong is one of the quickest routes to dismissal, especially when a seasoned attorney is actively looking for errors to exploit.

 3. Curing Mortgage Arrearages: The Dual Payment Burden

Chapter 13 is often chosen by homeowners who are behind on their mortgage and want to stop foreclosure. But the plan requires the debtor to do two things simultaneously:

• Pay the Arrears: The plan must correctly calculate the exact amount of “arrears” (the past-due debt) and propose a financial plan to repay it over three to five years.
• Maintain Regular Payments: The debtor must also keep up with all new, regular monthly mortgage payments outside of the plan.

The harsh reality faced by bankruptcy attorneys, trustees, and judges is that a debtor who could barely afford their mortgage will not be able to afford the regular monthly payment PLUS the added monthly payment for the arrears.

The Consequences of Dismissal: A High-Stakes Failure

When a Chapter 13 case is filed without a lawyer and is dismissed, all the traction the debtor gained moving forward is lost.

The Automatic Stay Vanishes:  The moment the judge dismisses the case, the protection (the “automatic stay”) that stopped creditors from foreclosing, repossessing property, or suing you disappears. Creditors are free to resume collection efforts.

• The Automatic Stay (11 U.S.C. § 362): A Legal Expert’s Guide

You May Owe More: In many cases, the plan payments, while credited towards your debt, can still be considered wasted money because the original debt, plus accrued interest, fees, and penalties, may apply. You lose the money you paid and still have to face foreclosure or repossession.

The Clock is Restarted, But Worse: If you try to refile after a dismissal, you may face severe limits on the automatic stay protection, making a successful second attempt even more challenging.

In addition, if you try to set aside the dismissal, you must provide proof to the court that you have the funds to bring the case current. For example, suppose your case was dismissed two months ago. In the third month, you seek to set aside the dismissal. The judge will require you to have three months of payments “to bring the case current.”

Don’t Fall for the False Economy

While saving attorney fees may sound appealing when you are already in debt, the true cost of failure in a Chapter 13 is the loss of your home, the repossession of your car, and owing more than you did before you started. All for a 98% chance of not receiving any relief. The odds are stacked against the debtor. As the old saying in my culture goes, translated: what is cheap turns out to be expensive.

• Understanding Bankruptcy Costs: Fees vs. Expenses
• Can You Pay Bankruptcy Attorneys with Credit Cards?

Chapter 13 is a serious legal tool for serious problems. Because it is designed to reorganize secured and unsecured debt over multiple years under court supervision, it requires the specialized knowledge that only an experienced Chapter 13 bankruptcy attorney can provide.

In this instance, hiring a professional is not an expense; it is the essential investment required to achieve the fresh start you deserve. When clients are still convinced they can handle Chapter 13 alone, I confirm they are not an auto mechanic. Once confirmed, I ask them if they feel confident changing the transmission in their car. The answer to that should be the same answer to handling Chapter 13 on your own.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.

You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.