Chapter 13 Bankruptcy

Filing a Chapter 13 bankruptcy allows you to restructure your debts under a court-approved repayment plan. Upon filing Chapter 13 bankruptcy, all collection efforts must stop immediately, including foreclosures, wage garnishments and bank account seizures.

Chapter 13 is most often used by people who have fallen behind on their house payments, car payments of tax obligations. A Chapter 13 plan allows you to set up a payment plan and to settle such debts over an extended period of time. At the end of a Chapter 13 plan, any unsecured debts that have not been paid in full are eliminated, or “discharged.”

Chapter 13 may also be used to eliminate some debts that could not be eliminated in a Chapter 7 case. Also , some debtors’ income is too high to qualify for a Chapter 7 case, or they do not want to lose assets that would have to be surrendered in a Chapter 7 case.

Chapter 13 Has Limitations

Not everyone can file a Chapter 13 case. A debtor must have a regular source of income, and there are upper limits on the amount of secured and unsecured debt. I can advise you of these matters at our initial meeting.

The Chapter 13 Plan

When you file a Chapter 13 case, you submit a Chapter 13 plan to the court showing the amount of disposable income you have that will then be paid monthly to the Chapter 13 Trustee. The amount of this payment depends on the net income minus reasonable and necessary expenses for the debtors and their families. The Chapter 13 plan will specifically provide full payment for priority debts (such as delinquent taxes and child support), secured debts in arrears (mortgages or vehicle payments) and either full or partial payment of unsecured debts (credit cards, medical bills, etc.).

Confirmation of the Chapter 13 Plan

After a Chapter 13 case and the Chapter 13 plan are filed with the court, it will be reviewed by the Chapter 13 Trustee to make sure that it meets all of the legal requirements. The bankruptcy court will then confirm the plan. Upon confirmation, the plan is binding on all creditors as they are provided for in the plan.

Post-Filing Chapter 13 Requirements

Once a Chapter 13 plan is filed, you must make all required monthly payments. You may also have to pay to the Trustee the net amount of employment bonuses and other income or inheritances that you may receive. The trustee will require that you submit to their office copies of your annual tax returns by terri due date. If you experience changes to your income or expenses during the duration of your Chapter 13 case, you can modify your Chapter 13 plan to reflect the changes. Your attorney will advise if this is necessary and do this for you.