Filing for Chapter 13 Bankruptcy is not an easy or quick process. The filing process involves a great deal of time, effort and money to be successfully executed. However, once completed, it can provide a path back to financial viability. It is very important to have an attorney at your side because the intricacies of filing can be complex for the average person.
Filing the Bankruptcy Petition
The first thing you have to do when filing for bankruptcy is to complete a bankruptcy petition for the court. The petition itself is lengthy and details the petitioner's debts, assets and other financial information. Once the petition has been filed, a "stay" automatically goes into effect which prohibits creditors and lenders from making any further attempt at collection. The stay remains in effect until the bankruptcy court makes a decision regarding the details of further repayment.
Once the stay has been put into place, the bankruptcy court will send notices to all creditors listed in the petition informing them of the change in the petitioner's financial status. Then, the court will assign a bankruptcy trustee to the case.
Commencement of Case
A Notice of Commencement of Case will be sent to both the petitioner and the creditors listed in the petition within 15 days after the petition is filed. The notice will include information regarding the specifics of the creditors meeting as well as deadlines for the creditors to enter claims or objections.
The petitioner must be sworn under oath with penalty of perjury at the meeting of the creditors and claim that all facts within the bankruptcy petition are accurate and true. A few brief questions may also be asked of the petitioner during this meeting.
Deadlines & Schedules
The deadline for schedules containing information regarding the filing individual's assets, debts, expenses and income is within 15 days of the case commencement. The schedules are generally filed with the petition but may be filed separately in the case of an emergency. An immediate filing is required only in the case of foreclosure or repossession.
Establishing a Repayment Plan
The same deadline applies to the Chapter 13 repayment plan. The repayment plan under Chapter 13 is typically between three and five years. During this period, the petitioner makes regular payments on all balances. The bankruptcy court decides the order in which the debts are repaid. Secured debts are repaid first. The Bankruptcy Code dictates which unsecured debts are paid with remaining disposable income. Under the rules of Chapter 13, if all payments have been made on time, unsecured debt may be discharged.
Paying Back Debt
After the filing is complete, the petitioner must mail their monthly payment to the court appointed case trustee. The trustee will distribute the funds to the creditors. There are a few restrictions to the conditions of Chapter 13 repayment, such as notifying the trustee of any change in income. Any change in the petitioner's financial situation should be reported to the trustee in order to ensure that the petitioner is still meeting the conditions of Chapter 13 Bankruptcy.