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Chapter 13

How Chapter 13 Works

Initial Consultation

 Chapter 13 begins with an initial consultation with me in my office.   When you call my office, we will gather some initial information and schedule a consultation. When we meet, I will go over your financial situation and the Chapter 13 process, and answer your questions. There is no a charge for your initial in-office consultation with me.

Why file Chapter 13?

 In Chapter 13 you pay one or more of your creditors over a period of time. So, in addition to filing a petition, we also file a Chapter 13 plan. The plan explains who you are paying, how much you intend to pay and for how long.

 There are many reasons why you would file a Chapter 13.

 If you are behind on your mortgage, filing a Chapter 13 can force your mortgage company to accept a repayment plan to pay back your mortgage arrearages over a period of up to 5 years. Your foreclosure – and all other lawsuits – is stopped and you may qualify to discharge your other debts, such as credit cards and medical bills.  

 If you have assets, such as a home, which have too much value for you to file a Chapter 7, you can use a Chapter 13 to pay a portion of your debt and keep your assets. If, for example, you owed $30,000.00 in credit cards and your house is worth $5000.00 too much for you to file a Chapter 7, we would place you in a Chapter 13.   You would make payments of a little over $100.00 a month. Your creditors would receive $5,000.00 and you would discharge the remaining $25,000.00 of credit card debt.

 Chapter 13 can also be used to pay taxes and freeze the penalties as you pay.

 Preparing And Filing The Petition and Plan

 My office works with you to gather the information needed to prepare the petition and plan. We will go over the worksheets that you fill out and the documents to be submitted to the Trustee.

 When we receive all of the required information, we prepare the petition and plan. We work with you to make sure we have complete, up to date information. Help is available from my staff or me every step of the way. When the petition and plan are finalized, it is filed with the Bankruptcy Court and the Court notifies your creditors that you have filed.

 The moment the petition and plan are filed with the Court, an Automatic Stay goes into effect. This means that all civil lawsuits (including foreclosures) and all collection efforts, even active lawsuits, judgments and Sheriff Sales, are automatically stopped. If a garnishment is in effect it will be halted.

 Making Your Trustee Payments

 You begin making the payments under your Chapter 13 Plan on the first of the month following the filing of your plan. For example, if your plan were filed on May 15th you would make your first monthly payment to the Trustee on June 1st.

 Meeting With The Chapter 13 Trustee

 Approximately a month after your Chapter 13 is filed; you meet with the Chapter 13 Trustee.

 At your meeting with the Chapter 13 Trustee the Trustee goes over your plan to make sure you are making the correct payment and that you have the income to make your monthly payment. The meeting is brief and an attorney from my office will accompany you.

The Confirmation Hearing

A few weeks after your meeting with the Trustee, there is a Confirmation Hearing at which the Court decides whether or not to approve your plan.   My office handles the confirmation hearing. You do not need to attend.   When your plan is confirmed, the Court issues an Order confirming your plan. After that, you simply continue to make the monthly payment to the Trustee called for in the confirmation order.

 Discharge And Closing Your Case

 When your plan is complete, you receive your discharge. A discharge means that you no longer owe your debts. There are some debts that you cannot discharge in a Chapter 13, including most student loans, some taxes, child support and alimony. I will go over your debts with you to see if any of your debts may be nondischargeable. Otherwise your debts will be discharged. You will no longer be legally responsible to pay them.

 

Your Chapter 13 is closed after you receive your discharge and the Trustee audits your case and files a final report. The Court enters a final decree and closes your case.