Chapter 13 Bankruptcy

A Chapter 13 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a permanent residence.  Unless the court orders otherwise, the debtor will also need to file four things with the court:

(1) Schedules of assets and liabilities
(2) A schedule of current income and expenditures
(3) A schedule of executory contracts and unexpired leases
(4) A statement of financial affairs. 

husband and wife may file either a joint petition or individual petitions. (Official bankruptcy forms can be purchases at a legal stationery store.  They are not available from the court.)

Currently, the courts are required to charge a $155 case filing fee and a $30 miscellaneous administrative fee.  The fees should be paid to the clerk of the court upon filing or may, with the court's permission, be paid in installments (limit to four installments).  The final installment must be paid no later than 120 days after filing the petition.  For cause shown, the court may extend the time of any installment, provided that the last installment is paid no later than 180 days after the filing of the petition. If a joint petition is filed, only one filing fee and one administrative fee are charged.

In order to complete the official bankruptcy forms(which make up the petition, statement of financial affairs, and schedules), the debtor will need to compile the following information:

(1) A list of all creditors and the amounts and nature of their claims
(2) The source, amount, and frequency of the debtor's income
(3) A list of all of the debtor's property
(4) A detailed list of the debtor's monthly living expenses (i.e., food, clothing, shelter, utilities, taxes,
      transportation, medicine, etc.)

When a husband and wife file either jointly or individually, the above detailed data must be gathered for both spouses.  So that financial responsibilities can be accurately assessed when only one spouse files, the income and expenses of the non-filing spouse should be included in the debtor's schedules and statement of financial affairs.

Upon the filing of the petition, an impartial trustee is appointed to administer the case. If there are too many cases for the United States trustee to administer, he or she may appoint a standing trustee to serve in all Chapter 13 cases in a district. A primary role of the Chapter 13 trustee is to serve as a disbursing agent, collecting payments from debtors, and making distributions to creditors.

Making the plan work

The conditions of a confirmed plan are binding on the debtor and each creditor. Once the court confirms the plan, it is the responsibility of the debtor to make the plan succeed.  The debtor must make regular payments to the trustee, which will require adjustment to living on a fixed budget for an extended period of time. Alternatively, the debtor's employer can withhold the amount of the payment from the debtor's paycheck and transmit it to the Chapter 13 trustee.  Furthermore, while confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor may not acquire any significant new credit obligations without consulting the trustee, as such credit obligations may have an impact upon the execution of the plan.

A debtor may allow for the deduction of the plan payments from his or her paycheck.  Experience has shown that this practice increases the likelihood that payments will be made on time and that the plan will be completed.  In any event, failure to make the payments in accordance with the confirmed plan may result in dismissal of the case or its conversion to a liquidation case under Chapter 7 of the Bankruptcy Code.

Free Bankruptcy Consultation Please fill out the form below If you are drowning in debt with little realistic hope of paying off your bills, bankruptcy is your only real option. Although far from pleasant, bankruptcy can be easier to handle than the constant pressure put on a debtor by lenders and collection agencies. You can immediately stop all harassment and legal actions, wipe out a good deal of your debt and get a new start on life Thank you and Congratulations.

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