23/07/22
Bankruptcy is often a last resort for people experiencing severe debt. If you are having difficulty managing ballooning debt, Chapter 13 bankruptcy may be an option for you. This article provides general information regarding Chapter 13 bankruptcy, and does not replace the need for a legal consultation.
A chapter 13 bankruptcy is also known as a wage earner’s plan. It allows individuals who earn regular income to create a plan to repay all or part of their debts. By filing for Chapter 13, you can propose a repayment plan to make installments to creditors over the course of three to five years. How much you earn will dictate the length of the plan. Chapter 13 is beneficial to borrowers, because it makes debt repayment more manageable. It is beneficial to creditors, because they can get their money back, even thought it might take longer, which is better than not getting it back at all.
A chapter 13 case begins by filing a petition with the bankruptcy court. You must file the following with the court:
. Schedules of assets and liabilities
. A schedule of current income and expenditures
. A schedule of executory contracts and unexpired leases
. A statement of financial affairs
. Certificate of credit counseling
. Copy of any debt repayment plan developed through credit counseling
. Evidence of payment from employers
. Statement of monthly net income
. Any anticipated increase in income or expenses after filing
. Record of any interest the debtor has in federal or state qualified education or tuition accounts
. Copy of the tax return on transcripts for the most recent tax year and tax returns filed during the case
You will be charged a case filing fee and a miscellaneous administrative fee. These fees are typically due to the clerk of the court upon filing.
These fees can be paid in installments with the court’s permission.
. You will need to compile the following information:
. A list of all creditors and the amounts and nature of their claims
. The source, amount, and frequency of of the debtor’s income
. A list of all of the debtor’s property
. A detailed list of the debtor’s monthly living expenses
After the meeting with the creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court to hear the debtor’s chapter 13 repayment plan.
Once the court confirms the debtor’s plan, the debtor must follow through with the plan. They must make regular payments to the trustee. The debtor can keep property as long as payments are made. However, the debtor can’t take on new debt without consulting the bankruptcy trustee.
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