Chapter 13 Bankruptcy

Chapter 13 Bankruptcy can be a great help to anyone facing severe financial stress. It is intended to provide a way to eliminate some debts, and allow someone with a steady income to consolidate outstanding debt into an affordable payment plan. It can be used to stop foreclosure, repossession and even wage garnishment.

Bankruptcy is governed by federal laws that are intended to help consumers have a “fresh start.” Chapter 13 bankruptcy provides this by consolidating your debts into a payment plan that will allow you to pay off your debts in three to five years.

Filing Chapter 13 Bankruptcy: The Process

Initial Consultation – At this meeting, your financial situation is examined. You will be presented with all of the options available to you. If it is agreed that a Chapter 13 bankruptcy is most appropriate, you retain an attorney as your legal representation in this matter. Then you will be given a list of documents (such as tax returns, pay stubs, etc.) that will be needed to file your case. You will also be given paperwork to fill out and bring back to the attorney’s office.

Bring Back – Usually within a week of the initial consultation, you will return to the attorney’s office with the documents and paperwork that you were asked for at the initial consultation. The attorney will go over your paperwork with you to ensure that all of the necessary information is available. If you have any additional questions, you should ask them now. With the information provided, an accurate estimate will be calculated of what your monthly payment will be under a Chapter 13 plan. Remember, the calculation is only as accurate as the information that you provide to the attorney, it is very important that you provide all the information that is requested of you.

Signing – This meeting is the last step before filing. You will review all of the documents and sign the petition. The petition is the document that will be filed with the court and has the amount of your monthly payments. Also at this meeting, you will be told the date that your first payment is due and to whom and what address to make the payment.

Filing – After the signing meeting, your case will be filed and notice will be sent to all of your creditors. Getting to this point will depend upon the urgency of your case and your work schedule.

341 meeting – Between 30 to 60 days after your case is filed, a 341 meeting, or meeting of creditors will be held. This meeting is held before the trustee, usually in the trustee’s office.

Begin making monthly payments – The first monthly payment on your Chapter 13 plan is due 45 days after your case is filed, regardless of whether your 341 meeting has occurred. Make sure that you make this payment on time and you include your name and case number on your payment.

Discharge – After you have completed all of your payments on the Chapter 13 plan, you will receive a discharge. This means that you no longer owe any of the creditors that were included in your consolidation.