If you are planning to file for chapter 13 bankruptcy, it will be useful to understand the process and what to expect. Before you proceed, it is a good idea to discuss your situation with a bankruptcy lawyer, so you can ensure chapter 13 is right for you and not an alternative option. By getting legal advice, you should be able to make an informed decision on how best to proceed.
Once You Decide to File Chapter 13 Bankruptcy
If you have decided to file for chapter 13, your lawyer will talk to you about the documents that are needed to file,review any client instructions, as well as provide you with a monthly expense worksheet. Before you file, you should prepare all of these documents. Some documents you will need include:
- Tax returns
- Bank statements
- Statements you have received from creditors
- + More
All of these should be handed over to your bankruptcy lawyer.
Complete a Counseling Course
Before you officially file for chapter 13, you must complete an online counseling course. This course will discuss your financial situation, how to resolve and organize debt, and more. Your lawyer can help you to complete this course in a timely manner.
Prepare the Petition
Once the above steps are completed, your lawyer will prepare a petition for filing. This petition will explain your financial situation and why you are choosing to file for chapter 13 bankruptcy. The petition will also include any information about your creditors, income, assets, and so forth. A Chapter 13 Repayment Plan will also be included. This acts as a roadmap for what will happen over the next 3-5 years. It will discuss who will be paid, what amount, and what your monthly payment plan will be. All of this is electronically filed at the federal court.
As soon as the bankruptcy is filed, a notice of automatic stay will be sent to all creditors. This notifies them that the laws of the Bankruptcy Code have been enacted and they cannot sue, garnish your wages, or call you.
Payments Are Made
Once you file, you must begin marketing payments to the trustee of your case. This is an independent party who will oversee the case and make payments on your behalf. The lawyer can be the trustee. Often payments are made via a voluntary wage deduction. In other words, they are automatically taken from your paycheck.
About 30 days after you have filed for bankruptcy, a 341 Meeting will be arranged. This meeting involves you, the trustee, your lawyer, and creditors. It will last 10-15 minutes and you must attend. You will be asked questions under oath regarding your financial situation and how you will pay the debt. Additional documentation may be required.
For 30 days after the meeting, your creditors or the trustee can object to any of the possible debt that can be discharged or property exemptions. In general, this only happens when there are allegations of fraud.
Also within 30 days, there will be a court hearing known as the Confirmation Hearing. Your lawyer can attend this on your behalf. All objections are to be resolved, follow up documents provided, and payments reviewed. A judge will confirm the case and it becomes set in stone.
You will be required to pay your debt for the next 3-5 years. You can review who has received payments, how much you owe each creditor, and other details on a federal website.
Throughout the case, your lawyer will be there for you and can make any necessary changes, suspensions, or requests. For example, a lawyer can ask the court for permission to buy a vehicle.
After 3-5 years of payment, the remaining debts will be discharged and you can begin to rebuild your credit and financial history.