An Overview of the Chapter 13 Process
Chapter 13 is a type of bankruptcy that is often referred to as a “reorganization” bankruptcy, as it allows debtors to reorganize their debts and make regular payments that are distributed amongst their various creditors. Chapter 13 is significantly different from a Chapter 7 liquidation bankruptcy in that it allows debtors to keep their property while they are making payments towards their plan, which can last anywhere from three to five years. At the conclusion of the plan, many leftover debts are discharged, which means that debtors are no longer under any legal obligation to pay them back.
Here are some of the steps involved in filing for Chapter 13 bankruptcy:
Determining Whether You Qualify
First, you need to determine whether you qualify for Chapter 13 bankruptcy, as not everyone does. In order to qualify, you need to be able to show the court that you will have enough income left over each month to make a payment. In addition, your debts must be under a certain threshold in order to be able to file for Chapter 13.
Complete an Approved Credit Counseling Course
In order to be able to file for Chapter 13, you must have completed a credit counseling course in the previous six months. You can see the list of agencies that offer approved courses at the United States Trustee’s website.
Prepare and File the Bankruptcy Petition
Next, you must prepare the forms that are associated with filing for Chapter 13. These forms list all of your assets and debts and must be complete in order to be accepted. Failing to account for all of your assets could result in you’re the denial of your petition—or even criminal bankruptcy fraud charges. For this reason, it is extremely important for anyone filing for bankruptcy to be extremely thorough with the information they provide to the court.
You must also file a proposed repayment plan with the court at this point. Because Chapter 13 repayment plans are extremely complicated, it is highly advisable to create one with the assistance of an experienced attorney.
The Automatic Stay and Confirmation of Your Plan
At this point, if the court approves your petition, the court will issue an automatic stay that prevents creditors from taking any collection actions, including foreclosure, repossession, filing lawsuits, or sending letters or making calls. Before your plan can be approved, there must be a meeting of creditors where they can ask you about your finances and potentially object to your plan. There will then be a confirmation hearing at which the court addresses any objections or issues.
Complete Your Repayment Plan
If confirmed, you will then enter Chapter 13 bankruptcy for the duration of your repayment plan. So long as you stay current with your payments, you will be protected from collection action from the creditors who are part of your plan.
Personal Financial Management Class and Discharge
Upon the conclusion of your repayment plan, you will need to take a debtor education class before the court closes your case. Once this has occurred, the court will discharge any eligible debt and your bankruptcy will be over.
Call Berkowitz & Myer Today to Speak with a St. Petersburg Chapter 13 Lawyer
If you are experiencing financial distress in spite of making a regular income, Chapter 13 bankruptcy may be able to help you. At Berkowitz & Myer, we will take the time to fully evaluate your financial situation and let you know how we think you should proceed. To schedule a free case evaluation with one of our bankruptcy attorneys in St. Petersburg, call our office today at (727) 344-0123 or send us an email through our online contact form.