Chapter 13 Bankruptcy
Overview
Chapter 13 is a type of bankruptcy designed to consolidate bills and repay creditors. Under Chapter 13, a person makes regular payments to a Trustee assigned by the Court. These payments are generally made through a wage assignment if the person is employed.
In preparing a Chapter 13, it is important to list all debts owed, even if the payments are current. You may also include utility bills and your services will not be terminated. You may, however, have to pay a deposit equal to 1 ½ times the highest monthly bill. You must also pay your future utility bills yourself. If your utility bills are current, it is not necessary to list them.
Some debts are not dischargeable in Chapter 13. You may not incur additional credit over $1,000.00, without court approval. If you seek to incur a debt to purchase a vehicle or repair a home, you should bring a copy of the proposed purchase agreement to the attorney to present to the court.
After you have retained our office, a legal assistant will prepare your petition. She or he may contact you regarding information necessary to complete the petition. The petition can be prepared quickly, if you provide all the requested information properly.
Often times, clients in Chapter 13 are faced with foreclosure, repossession or utility shutoffs. If is important that you schedule an appointment to review and sign your petition well before any of these events, so that your case can be promptly filed. Your case must be filed before a Sheriff's sale, or you will not be able to reinstate your mortgage.
Upon retaining our office, you are usually given a date to return and sign your petition. This date is for control purposes. You should contact our office before that date and verify that your petition is prepared and schedule and appointment to review and sign your petition.
At the appointment to sign your petition, the attorney will prepare your repayment plan. Your assistance is required to determine the payments which will be made over a period of 3 to 5 years depending upon your income and expenses.
Your case will be filed shortly after you sign your petition. At the signing you will also be advised to start making payments to the Trustee immediately. Your case could be assigned to anyone of three Trustees. You must contact our office within a few days after you sign, so that we can advise you of your case number and Trustee so that you know the proper place to send your payments. Most cases are dismissed because of the Debtor's faire to start promptly making payments to the Trustee. Although most cases have wage assignments, these do not take affect immediately. Do not wait for the wage assignment to take effect to start making your payments. You should keep a record of all your payments.
After your case is filed, the Court will send a notice of First Meeting of Creditors to you, your creditors, and to our office. Your creditors will stop calling you after they receive this notice. If they continue to call, explain to them that you filed bankruptcy and give them your case number and the date you filed.
The First Meeting of Creditors Notice contains the two dates you must appear in Court. The First Meeting hearing lasts only approximately 5 minutes and you should appear well before the hearing because you must complete paperwork at the court. The second hearing usually occurs approximately a month after your first meeting and generally lasts much longer.
After your case is filed, you may receive objections from your creditors; we will also receive copies of these objections. Our paralegal will address these objections. She/he may contact you to obtain information necessary to resolve the objection or request that you make an appointment with my office to change your schedules.
Most cases require that you send 100% percent of your Federal Tax refunds to the Trustee. The IRS will not send this to the Trustee. It is your obligation to forward the refund to the Trustee. Failure to forward the refund to the Trustee will result in your failure to complete the case and obtain a discharge.
In a Chapter 13, you must file your tax returns timely every year and provide a copy to our office as well as up to date tax returns timely every year, and provide a copy to our office as well as update your current income and expenses annually not later than 45 days before the anniversary date of the plan confirmation.
If you have a home you may consider refinancing your mortgage at some point. This is usually at least 18 months after you have filed your case. You must obtain court authorization to refinance and you should schedule an appointment with my office to review the procedure.
Your plan must be completed within the time proposed for your case. The plan will start running from the date your case is confirmed. No plan can extend more than 60 months after the confirmation date.
After your case is filed, you cannot add debts that you incurred subsequent to the filing. If you obtain new debts after you file such utility bills etc., you may have to dismiss your case and re-file to include these debts on your new case.
The Trustees will not disburse the money you send to him unless your case is confirmed. Your payments will be disbursed to pay your secured debts such as your mortgage and car note before any money is paid to unsecured creditors such as credit cards.
The Trustee will send you semi-annual statements regarding your progress in the case. You should contact the office if you are unable to make payments. We understand that this is a difficult time for you and we will help to make the process run as smoothly as possible.