Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to restructure your debts and pay them over a three to five year period in a payment plan that you and the U.S. Trustee agree to, not one the creditors agree to.  This is a key element.  The U.S. Trustee creates a payment plan that you can live comfortably while paying back anywhere from 1%-100% of your debt, depending on your income and expenses.  This payment can be adjusted if you lose income. Carmel Hehr one of the the attorney’s at Bankruptcy Professionals was a former U.S. Bankruptcy Trustee and has overseen and advised on 1000’s of Chapter 13 cases.  She knows what will work and what will not work.

In a Chapter 13 bankruptcy case, you are allowed to keep your property, both exempt and non-exempt, and to pay all or some of your debts pursuant to a repayment plan known as the Chapter 13 bankruptcy plan. Upon successful completion of the Chapter 13 bankruptcy plan, the debtor receives a discharge quite similar to that received by Chapter 7 bankruptcy debtors.  If your circumstances change significantly you may be able to convert your Chapter 13 plan into a Chapter 7 plan.

Chapter 13 Bankruptcy Eligibility

Any individual who has regular income and resides, is domiciled, or has a place of business or property in the U.S. may file a Chapter 13 bankruptcy case. The Bankruptcy Code defines regular income as income which is sufficiently stable and regular as to allow a debtor to make the payments set forth in his Chapter 13 bankruptcy plan. Additionally Chapter 13 debtors must have liquidated unsecured debts of less than $383,175 and secured debts of less than $1,149,525.

The Filing Process

Every Chapter 13 bankruptcy debtor must complete a pre-bankruptcy counseling class within the 180 day period prior to filing. The certificate of completion for the class must be filed with the bankruptcy court along with the bankruptcy petition and schedules and the Chapter 13 bankruptcy plan. Additionally, Chapter 13 bankruptcy debtors must file pay stubs and payment advices for the 60 day period immediately before the bankruptcy petition is filed. Chapter 13 bankruptcy debtors must also provide the bankruptcy trustee with a copy of their most recent tax return at least 7 days before the Meeting of Creditors.

A Chapter 13 bankruptcy debtor must pay the filing fee of $310. Chapter 13 bankruptcy debtors may request permission to pay the filing fee in installments by filing an Application to Pay Filing Fee in Installments at the time that the bankruptcy petition is filed. If the application is granted, the debtor must pay the filing in full within 120 days of filing bankruptcy and in no more than four installments.

The Chapter 13 Bankruptcy Plan

The Chapter 13 bankruptcy plan must allocate 100% of the debtor’s monthly net disposable income for payment into the Chapter 13 bankruptcy plan. The plan must specify the frequency with which plan payments will be made, whether they will be paid via income deduction or directly by the debtor, and the duration of the plan. Additionally, the plan must set forth how much will be allocated toward secured, priority unsecured, and general unsecured debts.

A Chapter 13 bankruptcy debtor must begin making plan payments immediately. All payments which come due between the date the bankruptcy case is filed and the date of the confirmation hearing must be made in order for the debtor’s Chapter 13 bankruptcy plan to be confirmed. Additionally, all post-petition mortgage payments and other adequate protection payments must be made in order for the Chapter 13 bankruptcy plan to be confirmed.

The Meeting of Creditors

The Meeting of Creditors takes place about 30 days after the bankruptcy petition. The debtor’s attendance at the Meeting of Creditors is mandatory. During the Meeting of Creditors, the debtor gives sworn testimony regarding the contents of his bankruptcy petition, including his income, assets, and debts. The Meeting of Creditors is conducted by the bankruptcy trustee; however, creditors have the option of attending and may question the debtor. At the conclusion of the Meeting of Creditors, the trustee will enumerate any Objections to Confirmation he may have. The debtor has until the Confirmation Hearing to cure any such objections.

The Confirmation Hearing

At the Confirmation Hearing the bankruptcy trustee will either recommend that the debtor’s Chapter 13 bankruptcy plan be confirmed or that the case be dismissed. If the trustee recommends confirmation, the court will issue an order accordingly. If the trustee recommends dismissal, the court will conduct a hearing and enter a ruling either confirming or dismissing the case.

How The Attorney’s at Bankruptcy Professionals Can Help You

At Bankruptcy Professionals, we are committed to helping you resolve your financial issues and get the fresh start you deserve. Our bankruptcy attorneys know that every case is different. Therefore, we work closely with you, taking into consideration your special needs, circumstances, and goals. We work closely with you to formulate a Chapter 13 bankruptcy plan that will be confirmed. We know how important the outcome of the bankruptcy is to you. To that end, we remain in close contact with you for the duration of the case so that we are ready to address any issues which may arise that could impact your discharge.

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