Chapter 13 Bankruptcy
I file many chapter 13 bankruptcies, but I typically suggest chapter 7 bankruptcies to be filed to those who qualify. In my opinion you should file a chapter 13 bankruptcy when you still need bankruptcy protection but make more money than what’s needed for a chapter 7 bankruptcy; when your assets in a chapter 7 bankruptcy would be sold by the trustee but not desired to happen in order for you not to file a chapter 7 bankruptcy, but bankruptcy protection is still needed; also when you’re trying to save a home from foreclosure or a car from repossession. You could just file a chapter 13 bankruptcy instead of a chapter 7 if you wanted to.
This firm and most attorneys will allow you to pay some attorney’s fees under the chapter 13 repayment plan. If you’re eligible, this firm lets you pay ALL ATTORNEY’S FEES in the plan. Make sure that you’re not filing a chapter 13 bankruptcy just to pay the attorney’s fees over time, when you’d be better off filing a cheaper, faster chapter 7 bankruptcy than the stress of filing a pre-doomed chapter 13 bankruptcy, which you end up having dismissed by the court or you changing it into the chapter 7 bankruptcy that should’ve been filed to start with. It will save you money, time and headaches.
When a chapter 13 bankruptcy is filed, the same basic paperwork in chapter 7 bankruptcies is done, but a chapter 13 payment plan is also filed. The chapter 13 bankruptcy payment plan is what tells a chapter 13 bankruptcy apart from a chapter 7. In a chapter 7 bankruptcy you dismiss your debt and usually only keep paying secured creditors with liens on items you want kept, like your house and car. In a chapter 13 bankruptcy, the chapter 13 payment plan is a way for you to reorganize your debt. Generally, you tell the bankruptcy court and creditors how you plan to repay the creditors over 5 years at most. In some situations you can do a 3 to 5 year repayment plan instead.
If your payment plan is approved, then monthly payments to a chapter 13 bankruptcy trustee for the 5 years are made and he pays the creditors. Usually, the only debt not paid in this plan is your future mortgage payments. So each month, you make the plan payment to the trustee and a mortgage payment to the bank. I repeat... you still have to pay mortgage payments after a filed chapter 13 bankruptcy.
Most chapter 13 bankruptcy payment plans spread paying the car and furniture-type loans over five years, and pay the unsecured creditors (credit cards, doctor bills, etc…) at a percentage of what’s owed, from 1, depending on your income and the value of your assets The time line for a chapter 13 bankruptcy is as follows: you file your case, chapter 13 payment plan, and carry out the plan with the creditors. The creditors have 25 days to oppose the plan. It can’t be resisted from just being upset about you filing bankruptcy. They must have a legal reason, which aren’t many. There’s also a meeting of creditors (hearing) about 30 days after filing. Usually, creditors don’t come. In North Carolina, your first chapter 13 plan payment tends to be due 10 days after a chapter 13 bankruptcy is filed and in South Carolina, it’s due 30 days after you file bankruptcy.
At the hearing, in NC the chapter 13 bankruptcy trustee expects your latest tax return sent beforehand and your social security card with your driver’s license brought to the trial. He’ll ask some questions about your file for a bit while you’re under oath and then talk about changes he may think need to be made for the plan to work. He usually makes them there and asks the attorney for information, if needed. Then you’re released and keep paying on the plan or the new payment amount if changed at the hearing; and you pay on the house on time as well.
If you're unable to make a chapter 13 bankruptcy payment plan that you all can agree on then, in NC, the bankruptcy judge will call for a confirmation hearing. That's where both sides argue your legal and factual positions to a bankruptcy judge as to why a bankruptcy plan should or shouldn't be confirmed, and he makes the ultimate decision.
In South Carolina, approximately 30 days after you file, you’ll go to the creditors meeting and you, your lawyer and the trustee of the chapter 13 bankruptcy tend to be the only ones there. Before the hearing, you must send requested information to the chapter 13 bankruptcy trustee such things as tax returns, pay stubs, proof your up to date on child support payments since filing. The required information to send is listed in pdf form on our website. At the hearing, the chapter 13 trustee asks you questions under oath, gives your attorney a booklet for you, telling you how to deal with their office and staff and about chapter 13 bankruptcy. He’ll also give a sheet to your attorney depicting how the chapter 13 trustee wants to change your plan, or what he still needs from you so he can review it before the confirmation hearing, which you always have in SC. However, if you can prepare the plan like they want, and get all the requested information to the chapter 13 trustee in enough time that allows him to review it before the confirmation hearing, you and your attorney usually don’t have to go.
In SC, 30 days after filing your case is when your first chapter 13 plan payment is due. Chapter 13 trustees often require it taken automatically from your paycheck. Your mortgage payments must also be met on time. Once the plan's set, you basically know what the next 5 year’s look like.
I say this, because in about 3 months a chapter 13 plan can get approved, but in all chapter 7 and 13 bankruptcies, the creditors have to prove that money’s owed to them by filing a proof of claim, by showing the documents proving that you’re liable for a debt and the owed amount, with the bankruptcy court. In all states the deadline for creditors to file claims (non- governmental) is 4 months, and for the government it’s 6 months. If a claim comes in with a higher amount than you thought after his chapter 13 bankruptcy plan was approved, the chapter 13 bankruptcy trustee may have you raise his chapter 13 payment plan payment.
Like when bankruptcy trustees need the bankruptcy court’s approval to pay creditors. Bankruptcy trustees wait for the claims filing deadline passes and see who filed a proof of claim. They’re proofed for accuracy, completion and promptness by the bankruptcy trustees. The bankruptcy trustee will object if something’s wrong and/ or refuses to pay it. When the bankruptcy judge states who’s to be paid by the bankruptcy trustee, all the money that the debtor has been paying each period is given to the creditors. Then the trustee gives each creditor their money monthly, according to the arrangement in the official chapter 13 payment plan.
In SC the chapter 13 bankruptcy trustee sends summaries to the debtors every 6 months of the amounts being paid and how much is still owed. When all payments are made, the chapter 13 trustee will do a final check, review the file and the bankruptcy judge orders a discharge of the unpaid debts, the interest needing no payment as set by the payment plan, etc. which says to creditors, that the debtor paid everything according to his official chapter 13 bankruptcy payment plan and, even if they weren’t fully reimbursed, plus interest, late fees, etc., that it’s all the creditor’s getting and they can’t receive any more. The bankruptcy court closes the debtor’s file and he’s out of bankruptcy.
A lot of issues could come up with a chapter 13 bankruptcy and some are listed on our site.
