Chapter 13 Bankruptcy: How it works and what you need to know.

A chapter 13 case launches by filing a petition with the bankruptcy court serving the area where the borrower has a home or residence.

Unless the court orders otherwise, the borrower must also submit 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 borrower has 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, procured 60 days before filing; a statement of monthly net income and any envisioned 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 needs to supply the chapter 13 case trustee with a copy of the tax return or hard copies for the most recent tax year as well as tax returns submitted during the case (including tax returns for prior years that had not been filed when the case launched).

A husband and wife can file a joint petition or individual petitions.

The courts need to charge a $ 235 case submission fee and a $ 46 miscellaneous administrative fee. Customarily the costs must absolutely be paid to the clerk of the court upon filing. With the court’s permission, nonetheless, they may be remitted in regular payments.

The number of installments is restricted to four, and the debtor must make the final payment no later than 120 days after filing the petition.

If necessary, the court may increase the time of any installment, 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 cost in regular payments. If a joint petition is filed, only one filing fee and one administrative fee are charged. Consumers should be aware that failure to remit these charges 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, balance, and amount of the debtor’s income;
* An accounting of all of the individuals property; and
* A detailed reporting of the debtor’s monthly living costs.

Married individuals have to put together this data 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 money and expenses of the non-filing spouse is needed so that the court, the trustee and creditors can review the household’s financial situation.

When an individual files a chapter 13 petition, an objective trustee is appointed to administer the case. In some districts, the U.S. trustee or bankruptcy administrator assigns a standing trustee to serve in all chapter 13 cases. The chapter 13 trustee both reviews the case and serves as a disbursing officer, acquiring repayments from the consumer and making distributions to financial institutions.

Submitting the petition under chapter 13 “automatically stays” (stops) most collection procedures against the debtor or the debtor’s property. Filing the petition does not, however, stay certain types of actions listed under 11 U.S.C. ?? 362 (b), and the stay may be effective only for a short time in some situations. The stay occurs by process of law and demands no judicial action. As long as the stay is in effect, creditors generally may not trigger or maintain court actions, wage garnishments, or yet make telephone calls wanting payments. The bankruptcy clerk gives notice of the bankruptcy case to all financial institutions whose names and addresses are supplied by the debtor.

Chapter 13 additionally contains a wonderful automatic stay arrangement that gives protection to co-debtors. Unless the bankruptcy court gives authority otherwise, a creditor can’t seek to collect a “consumer debt” from any person who is bound along with the debtor. Consumer debts are those incurred by an individual primarily for an individual, family, or household purpose.

Individuals might use a chapter 13 case to save their house from home foreclosure. The automatic stay ends the foreclosure case as soon as the individual files the chapter 13 bankruptcy filing. The individual may at that point bring the past-due payments current over a reasonable period of time. Even so, the debtor may possibly still lose the home if the mortgage company finishes 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 ordinary mortgage payments that come due after the chapter 13 filing.

Somewhere between 21 and 50 days following the consumer files the chapter 13 petition, the chapter 13 trustee will certainly convene a meeting of creditors. If the U.S. trustee or bankruptcy administrator schedules the meeting at a spot that does not have routine U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the consumer files. In the course of this meeting, the trustee puts 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 attend the creditors’ meeting and respond to questions. In order to save their separate judgment, bankruptcy judges are prohibited from attending the creditors’ meeting. The parties traditionally deal with issues with the plan either during or soon after the creditors’ meeting. Commonly, the debtor can steer clear of troubles by making sure that the petition and plan are complete and accurate, and by consulting with the trustee before to the meeting.

In a chapter 13 case, to partake 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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