8 Steps to Filing Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a very effective way to manage and repay creditors. People who file Chapter 13 are usually middle to high-income wage earners who also have debts that are unmanageable under their current circumstances. The chapter 13 bankruptcy process gives them a better and usually much less expensive way to repay the debt in a structured manner. It stops all unsecured debt collection and payments and restructures the obligation into a more manageable monthly payment.
Some people repay their creditors as little as pennies on the dollar and some repay their creditors 100% of what is owed under much better terms, like zero percent interest. Chapter 13 is a powerful tool for you to get a bankruptcy discharge and regain control of your financial life and get a meaningful fresh start.
In order to file for Chapter 13 bankruptcy, you must meet several requirements:
- Resident – You must reside in, do business in, or own property in the United States.
- Income – You’ll need to prove to the court you not only have a regular income but you can afford your financial obligations under the proposed monthly repayment plan.
- Debt – Meet secured and unsecured debt limits.
- An Individual – Chapter 13 is not available to companies, but if you’re a sole proprietor, you can include both personal and business debts in your Chapter 13 petition.
2. Mandatory Credit Counseling
All individuals who file for bankruptcy must complete a credit counseling course by an approved agency within 180 days prior to filing for bankruptcy. This counseling will help you to determine if bankruptcy is an appropriate option, and which one is right for you.
3. Filing your Chapter 13 Petition
The Petition and Schedules are the detailed facts about you and your property. A Chapter 13 bankruptcy case begins by filing a petition with the bankruptcy court and paying a filing fee. The petition is accompanied by a whole packet of other forms and information. The petition must include the following information:
- Debt – list of all creditors and amount owed
- Income – source, amount, and nature of the income
- Property – list of all property and assets
- Living expenses – list of all monthly living expenses, including food, clothing, shelter, utilities, taxes, and medical
If married you’ll need to include this same information for your spouse—even if you’re filing a separate bankruptcy petition.
In addition to the petition, you’ll also need to file the following documents with the court:
- Schedule of assets and liabilities
- Schedule of current income and expenditures
- Statement of financial affairs
- Schedule of executory contracts and unexpired leases
- Certificate of credit counseling
- Copy of debt repayment plan
- Evidence of payment from employers received within 60 days prior to filing
- Statement of monthly net income
- Document detailing any anticipated increases in income or expenses after filing for bankruptcy
- Record of any interest the debtor has in federal or state qualified education and tuition accounts
4. The Automatic Stay
Once your Chapter 13 bankruptcy petition is filed the automatic stay goes into effect. The automatic stay is a one-page document that gets sent to all your creditors notifying them of your bankruptcy and prohibiting them from taking certain actions. It basically prohibits creditors from making any further collection actions outside of the bankruptcy.
5. Repayment Plan
Unless granted an extension by the courts, your repayment plan must be filed, submitted for court approval, with or within 14 days after the Chapter 13 petition is filed.
The monthly repayment plan is the heart of a Chapter 13 bankruptcy. You must be able to develop a repayment plan you can afford for the 3-5 year repayment period, and the court must approve the plan. The plan tells the court and your creditors how you intend to pay your debts, how much each creditor will receive, and how long your plan will last.
6. Meet Your Trustee
When you file the petition, the court will appoint an impartial trustee to administer the case. The role of the Chapter 13 trustee is:
- to make sure your proposed repayment plan complies with the law
- receive the monthly payments you make under the plan and distribute them to your creditors in the manner required by law
- monitor the monthly income and expense reports required in a Chapter 13 case
- monitor your duty to file tax returns with the appropriate federal and state taxing authorities and annually while your Chapter 13 case is pending
- monitor your duty to file an annual financial statement charting your income and expenses.
- if you owe back child support, provide the payee and your state’s child support enforcement agency with the required information.
7. Meeting of the Creditors
Between 21 and 50 days, after you file your chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. You must attend this meeting and answer questions regarding your financial affairs and the proposed terms of your plan.
You will be placed under oath and both the trustee and creditors may ask questions. Any problems with the plan will need to be resolved during or shortly after the meeting. To avoid any problems it’s best to make sure the petition and plan are complete and accurate.
8. The Discharge
In order to receive a bankruptcy discharge of your debts at the end of your bankruptcy case, you must:
- make all payments under the plan
- remain current on your taxes
- remain current any child support or alimony obligations.
If your plan paid less than 100% of your unsecured debts, when you finish the plan, those debts will be discharged in full—meaning the remaining balance will be wiped out.
Contact Us For Help With Your Bankruptcy
Our firm will provide you with a range of fair fees right over the phone. We’ll give you a low attorney fee and allow you up to six months to pay the remaining fees, in amounts that will fit your budget.
Under this payment plan, you can hire us with as little as $100, which will allow you to refer any creditors or collection agencies to our office. Once the fees are paid in full, your case will be filed. Call (509)921-9500 to schedule an appointment today or submit our no free no-obligation consultation form.
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