Chapter 13 Bankruptcy: How it works and what you need to know.
A chapter 13 action starts by submitting a petition with the bankruptcy court serving the area where the debtor has a residence or residence.
Unless the court orders otherwise, the debtor must also document with the court:
* schedules of assets and liabilities;
* a schedule of current income and expenditures;
* a schedule of executory contracts and unexpired leases; and
* a statement of financial affairs.
The debtor needs to also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, gained 60 days before filing; a statement of monthly net income and any expected increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.
The consumer must provide the chapter 13 case trustee with a copy of the tax return or facsimiles for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case commenced).
A husband and wife may file a joint petition or individual petitions.
The courts must charge a $ 235 case submission fee and a $ 46 miscellaneous administrative fee. Commonly the fees need to be paid to the clerk of the court upon filing. With the court’s agreement, then again, they may be remitted in installments.
The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition.
For cause shown, the court may lengthen the time of any payment, as long as the last installment is paid no later than 180 days after filing the petition. Id. The debtor may also pay the $ 46 administrative charge in regular payments. If a joint petition is filed, only one filing fee and one administrative fee are charged. Borrowers should be aware that failure to pay these fees may result in dismissal of the case.
In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:
* A list of all creditors and the amounts and reasons fo of their claims;
* The source, amount, and amount of the debtor’s income;
* A list of all of the debtor’s property; and
* A detailed accounting of the debtor’s monthly living expenses.
Married individuals must accumulate this info for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the earnings and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household’s financial situation.
When a consumer submits a chapter 13 petition, a neutral trustee is identified to administer the case. In some districts, the U.S. trustee or bankruptcy administrator nominates a standing trustee to serve in all chapter 13 cases. The chapter 13 trustee both examines the case and serves as a disbursing representative, acquiring payments from the debtor and making distributions to lenders.
Filing the petition under chapter 13 “automatically stays” (halts) most collection steps against the consumer or the debtor’s property. Filing the petition does not, nevertheless, stay certain types of actions listed under 11 U.S.C. ?? 362 (b), and the stay may be effective basically for a short time in some situations. The stay arises by procedure of law and needs no judicial action. As long as the stay is in effect, financial institutions basically may not start or carry forward lawsuits, wage garnishments, or still make phone calls calling for payments. The bankruptcy clerk gives notice of the bankruptcy case to all financial institutions whose names and addresses are provided by the debtor.
Chapter 13 also includes a specific automatic stay arrangement that defends co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor cannot seek to collect a “consumer debt” from any individual who is liable along with the debtor. Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose.
Individuals may likely use a chapter 13 proceeding to save their home from real estate foreclosure. The automatic stay puts an end to the foreclosure proceeding as soon as the individual submits the chapter 13 petition. The individual may then produce the past-due payments current over a reasonable period of time. Regardless, the debtor can still use up the home if the mortgage company finalizes the foreclosure sale under state law before the debtor files the petition. The debtor may also lose the home if he or she fails to make the normal mortgage payments that are due following the chapter 13 filing.
Anywhere between 21 and 50 days following the borrower files the chapter 13 petition, the chapter 13 trustee will officiate a meeting of creditors. If the U.S. trustee or bankruptcy administrator schedules the meeting at a location that does not have routine U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the borrower files. During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan. If a husband and wife file a joint petition, they both must definitely attend the creditors’ meeting and respond to questions. In order to maintain their independent judgment, bankruptcy judges are restrained from appearing at the creditors’ meeting. The parties ordinarily resolve problems with the plan either during or shortly after the creditors’ meeting. Typically, the debtor can eliminate issues by making sure that the petition and plan are complete and accurate, and by consulting with the trustee prior to the meeting.
In a chapter 13 case, to take part in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has 180 days from the date the case is filed file a proof of claim.
After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor’s chapter 13 repayment plan.
For more information on how to find a good bankruptcy attorney or to find out more about Chapter 13 bankruptcy
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