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CHAPTER 13 BANKRUPTCYA decision made to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems. This introduction cannot explain every aspect of the bankruptcy process. If you still have questions after reading this, you should speak with an attorney familiar with bankruptcy.
WHAT IS A CHAPTER 13 BANKRUPTCY?A Chapter 13 bankruptcy is a repayment plan whereby a debtor proposes a plan to pay-back his creditors. In a Chapter 13 case, some creditors may get paid in full, while other creditors may get paid only a percentage of your debt. In most cases, a Chapter 13 bankruptcy plan lasts a minimum of three years and a maximum of five years.
SHOULD I FILE A CHAPTER 13 BANKRUPTCY?You may want to file a Chapter 13 bankruptcy if you are behind on your house payments or vehicle payments and can’t catch up (and you want to keep your house or vehicle). Or, if you want to pay off your past due taxes. You may need to file a Chapter 13 (instead of a Chapter 7) if your income is “too high” or if you have non-exempt property that you want to protect (keep).
WHAT WILL BE MY MONTHLY PAYMENT IN A CHAPTER 13 PLAN?That will depend on the facts of your case. Generally, if you want to keep your vehicle, you must pay off the vehicle through your Chapter 13 plan. If you have non-dischargeable taxes, you will also have to pay them off as well over the length of your Chapter 13 plan. The big variable in a Chapter 13 plan is the amount you have to pay on your unsecured debts (credit cards, medical bills, etc). Some people file Chapter 13 cases and don’t have to pay back anything to their unsecured creditors. Other individuals have to pay back as much as 100% (with no interest or penalties) to their unsecured creditors. The amount you have to pay back will depend mostly on the amount of your income and your monthly expenses and also, possibly, on the value of your non-exempt assets.
WHAT IS THE MEANS TEST?The Means Test is a mathematical calculation. The amount of your average monthly expenses are subtracted from your average monthly income (for the previous 6 months). The resulting number may determine the amount you have to pay back to your unsecured creditors in your Chapter 13 case. (Anywhere between 0% to 100% pay-back).
IF I FILE A CHAPTER 13 BANKRUPTCY, DO I LOSE MY PROPERTY?No. One reason people file Chapter 13 is to protect (keep) property that may be at risk in a Chapter 7 case.
WHAT KIND OF DOCUMENTS WILL I NEED TO FILE A BANKRUPTCY?
Whether you file a Chapter 7 or a Chapter 13 bankruptcy, you will need to provide your attorney, the Trustee and the Court a number of documents, including:
Copies of pay-stubs or other proof of income for the previous 6 months Copies of your tax returns for the previous two years Copies of Titles to your vehicles Copies of the Recorded Deed of Trust for any Real Estate Copy of your recent credit report List of your creditors List of your ongoing expenses (Budget) List of your assets
WHO IS THE CHAPTER 13 TRUSTEE?After you file your Chapter 13 case, an individual known as the Chapter 13 Trustee will be appointed to your case. He will review the documents you file with the Court to determine if you qualify for a Chapter 13 case. He will also review your Chapter 13 plan to determine if it conforms with the requirements of the U.S. Bankruptcy Code. You will pay your monthly Chapter 13 plan payment to the Trustee and he will distribute it to your creditors pursuant to the terms of your Chapter 13 plan.
IF I FILE A CHAPTER 13 CASE, WILL I HAVE TO ATTEND ANY HEARINGS?There is one hearing that you will be required to attend. The hearing will be held about 30 days after your Chapter 13 case is filed. At your hearing, the Trustee will put you under oath and ask you if all the documents you filed with the Court are true and correct and complete. The Trustee may also ask you to clarify or provide additional information. Your attorney should be with you at your hearing to assist you.
WHAT IS A CHAPTER 13 DISCHARGE ORDER?
A Discharge Order is one of the goals of a Chapter 13 case. A Discharge Order is an Order entered by the United States Bankruptcy Court that means that all of your dischargeable debts are no longer collectable. In most cases you will receive your Chapter 13 Discharge Order soon after you have made your final plan payment to the Trustee (usually about three to five years after your Chapter 13 petition was filed).
The law often changes. Each case is different. This introduction is meant to give you general information and not meant to give you specific legal advice. The information on this web site is of a general nature only.
The information presented on this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
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