When people are overwhelmed in debt and looking for answers, they wonder what bankruptcy can do for them. Chapter 13 is considered a ‘reorganization’ bankruptcy, as it gives you the chance to pay your arrears over some time. Filing Chapter 13 bankruptcy can keep your home from being foreclosed on, or your vehicles from being repossessed.
Who Can File
Chapter 13 is available to anyone who lives in the United States or has business or property in the U.S. You must also have a regular source of income. There is a limit to how much debt you have to be able to file Chapter 13, since that amount is over a
million dollars, it does not affect most consumers.
The paperwork you submit to the bankruptcy court will include your plan on how you intend to pay back your past debt. When you file bankruptcy, an automatic stay will immediately go into effect, preventing your creditor’s attempts to collect from you. This includes foreclosures, repossessions, and wage garnishments.
Your payments will be based on your ability to pay. After paying for living expenses, the remaining income will go to the trustee to pay your creditors.
Meeting of the Creditors
Approximately a month after you file your petition with the court, you and your attorney will meet with the court-appointed trustee. This meeting will be for the “meeting of the creditors.” Creditors usually only attend these meetings if they have any objections to your plan. The trustee will go over your plan and your financial information to determine if you can afford to make the payments.
Payments to the Trustee
You must begin making payments on the plan within thirty days of filing your papers with the court. The trustee will hold the payments until the plan is approved; at that time, the trustee will distribute the payments to the creditors.
Your creditors must file a proof of claim by a specific deadline if they wish to get paid. You or your trustee can submit a written objection if the creditor overcharged you, or if you have proof that you do not owe the debt. The judge will hold a hearing on the objection and decide if and how much the creditor should be paid.
The court will evaluate your plan at the confirmation hearing. The judge will determine if the requirements of Chapter 13 have been met and will hear any objections from the creditors or the trustee. If the plan is uncontested, in most cases, you will not be required to come to court.
After you complete the plan and make all the required payments, all debts provided for in the plan will be discharged. Secured debt, alimony, child support, and any fines or fees owed government agencies will not be eliminated.
If you have more questions about bankruptcy and would like to know how you can get financial relief, contact a Plano bankruptcy attorney today.