How to File Bankruptcy Chapter 13: Step-by-Step Process

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Today, we’re going to talk about filing chapter 13 bankruptcy.

Hi, my name’s Mike Ziegler. I’m the Managing Attorney for the Debt Fighters. We’re a Florida law firm focused on strategically eliminating serious debt.

Choosing Chapter 13 Bankruptcy

So first, let’s lay the groundwork. If you’re filing for Chapter 13 bankruptcy then we’ve already gone through an assessment to evaluate whether it’s the right way to resolve your debts. So in resolving debts, there can be a variety of different options. There can be Chapter 7 bankruptcy, the liquidation. It can be debt consolidation, which is usually a payment plan outside of bankruptcy. And debt litigation and negotiation, sometimes being sued by creditors and sometimes even suing your creditors.

But if you’ve already reached the point where you’ve determined that Chapter 13 bankruptcy is right for you, know that Chapter 13 is payment plan form of bankruptcy that lasts for three to five years.

Preparing the Bankruptcy Petition

So after you’ve made that determination, you would have prepared the bankruptcy paperwork. A Chapter 13 petition generally is going to include information about who you are, the assets you have, what you owe, how much money is coming in for both you and other household members and what your recurring expenses are. There’s some other disclosures included in the petition as well, but those are the basics.

In some extreme instances, if the bankruptcy has to be filed very quickly, if it’s right before, for example, a foreclosure sale, then a skeleton, or bare bones Chapter 13 petition may be filed. That doesn’t include all of that information, but that information will have to be supplemented shortly after that time.

What Happens After Filing?

After the bankruptcy petition has been filed, the court will register the case. It will assign a case number and the automatic stay will happen automatically. The automatic stay is the legal term for the freeze that the federal courts put over any pending collection activity. This includes, in most instances, activity that’s occurring in the state court, something like pending foreclosure or a debt collection lawsuit. That happens automatically when the case is filed.

The Role of the Trustee

Now shortly after the case has been filed, a trustee will be assigned to the case. And the 341 meeting, known as the meeting of creditors, will be scheduled. The trustee is like a case manager. Usually a Chapter 13 trustee is who you will make your payments to. They will view your paperwork and perform diligence. And they will be a voice largely for the creditors during the proceeding to ensure that your Chapter 13 payment plan meets the various requirements under the bankruptcy code.

The 341 Meeting of Creditors

The 341 meeting is an opportunity for the trustee to meet with you. And it’s also an opportunity for the creditors to meet with you, although it is less common for creditors to attend. And it’s their opportunity for them to perform their diligence, to understand who you are and what your circumstances are. They’ll ask questions about your income, your assets, and your expenses to make sure that the information and petition is accurate.

Confirmation of the Payment Plan

After the 341 meeting, there may be some supplemental processes, but most of the process revolves around confirmation. Confirmation is the term for the process to have the judge assigned to the case, review the plan and ultimately approve it. There may be some preliminary processes that occur before the judge is willing to approve the payment plan.

Making Payments During the Process

After the plan is confirmed, usually the consumer will continue to make their payments under the confirmed plan. It’s important to know that the payments began as soon as the case is filed. We don’t wait until confirmation to begin the payments, even though they haven’t been finally approved by the judge yet. After the payments are complete, generally a discharge will be entered, which is a court order that says that even if your payments aren’t enough to pay 100% of your debts any remaining balance is wiped out. And that’s the Chapter 13 process.

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