The Chapter 13 process can be very complicated and a debtor should always seek the assistance of an attorney to ensure that the case is handled properly.
While every case is different, there is a general time line that is followed in all cases.
A Chapter 13 is a reorganization of personal debt much like a Chapter 11 is for business debt.
This means that a debtor will make monthly payments to the Trustee for a period of three to five years.
This payment is determined by assessing the income and expenses of the debtor.
The assumption is that all disposable income will be paid to the Trustee to be distributed to creditors.
The Trustee will distribute this money to creditor based on the priority and amount of the creditor's claim.
If the debtor makes all the payments required under the Chapter 13 Plan then any remaining debt will be discharged.
In preparing for a Chapter 13 Bankruptcy, the first thing a debtor must do is gather the information needed to file their case.
Some of the common pieces of information that a debtor will need are tax returns filed in recent years, the past six months of pay stubs and information concerning their creditors.
The debtor will also have to take a credit counseling course within the six months prior to filing their case; this class can usually be completed online or over the phone.
Please contact a bankruptcy attorney for a complete list of what information is needed to file a Chapter 13 Bankruptcy as every case is different.
After gathering the information, the debtor's attorney will draft all the documents necessary to file the case including the proposed Chapter 13 Plan.
Once everything is in order, the debtor will review and sign the documents and the attorney will file them with the court.
On the day that a Chapter 13 Bankruptcy is filed, an automatic stay goes into place preventing any collection efforts by creditors.
This means that creditors cannot sue, garnish or even call the debtor.
The next major step in the process is the Meeting of Creditors (aka 341 Meeting).
At the Meeting of Creditors, the debtor will sit down and answer a number of questions for the Trustee assigned to their case.
The line of questioning will depend on the facts of each case, but the Trustee is generally ensuring that everything that was filed by the debtor and their attorney is true and correct.
Approximately three weeks after the Meeting of Creditors, there will be a Confirmation Hearing.
At the Confirmation Hearing, the Judge presiding over the case will hear from the debtor's attorney and from the Trustee regarding any disputed matters.
In some cases, the debtor and objecting parties are unable to resolve their dispute and it is necessary to take the issue to hearing so that a Judge may resolve it.
More commonly, however, the parties will come to an agreement and it will not be necessary to take the issue to hearing.
Once all outstanding objections are resolved the Judge will sign off on the Plan and the debtor will make the agreed upon payments to the Trustee.
DISCLAIMER: The information contained in this distribution is intended for informational purposes only.
It is not intended to be legal advice.
Your situation may vary and different facts creates different advice.
So do not take legal action based on this content! Always contact a lawyer near you.
The attorney's posting this advice are licensed in COLORADO only and thus there may be a dramatic difference in procedures in any other state.
This is not an advertisement for legal services except where permitted by law.