How a Chapter 13 WorksTo begin the case of chapter 13, an individual must file a petition to a bankruptcy court of the debtor's residence. The debtor needs to also file the following documents with a court: schedules of the liabilities and the assets; the schedule of the current incomes and the expenditure; a schedule of the executor contract and any unexpired lease; plus the statement of the financial affairs.
Unless directed court orders otherwise. The certificate of the credit counseling from an approved firm and the copy of debt repayment arrangements developed during credit counseling, net income of the monthly statements including expected income increases or the expenses after the filing, payment evidence from employers accepted sixty days prior to filing, and interest records from education and tuition accounts from federal or the state.
A debtor must provide a case trustee of the chapter 13 with tax return copies or tax transcripts that are most recent and filed tax returns associated with the duration of the case. These documents will include previous tax returns that weren't in file when this case opened. Id. Married couples have the option of filing for individual or joint petitions.
The court will charge a fee for the filing of the case of $235 as well as a $75 miscellaneous and administrative fee. Generally, a court clerk will collect these fees upon filing. The fees can be paid with installments with permission from the court. The debtor may make up to four installments. The final installment must be made 120 days or sooner after the petition has been filed.
The amount of installment payments is capped to four, and that debtor has to pay the last installment within 120 days after the petition is filed. A court can extend this time of any of the installments, so long as the final installment is completed within 180 days after the petition is filed. In addition, that debtor can pay the fee of $75 (administrative) by paying in installments. If there is a filing for a joint petition, one filing fee and one fee for administrative costs are due only. Debtors need to know that not paying the fee could result in case dismissal.
To finish the forms of bankruptcy for the petition, financial affairs statements, and schedules, that debtor has to gather this information:
When individuals file the chapter 13 petition, the impartial trustee is appointed for the administering of the case. For some districts, a U.S. trustee or a bankruptcy administrator will appoint the standing trustee for the serving in all of the cases of chapter 13. A chapter 13 trustee evaluates both the case and will serve as the disbursing agent, and will collect payment from debtor and make distributions to the creditors.
Filing for a petition under the chapter 13 stops most of the collection actions that are against a debtor or a debtor's property. Filing a petition doesn't, however, stop some types of action listed under section 362(b) and the stop may only be effective for a time that is short for some situations. The stay comes up by law operation and doesn't require judicial action. So long as the stop is active, a creditor may not start or continue a lawsuit, wage garnishment, or even start telephone calls to demand payment. A bankruptcy clerk will give notice of a bankruptcy case to all of the creditors whose addresses and names are given by a debtor. The automatic stay provisions in the chapter 13 case will protect co-debtors. The creditor won't collect payment for "consumer liabilities" from an individual who is liable with a debtor. Consumer liability is defined as liability accumulated by an individual for a primary purpose of household, family, or another personal category.
Chapter 13 may allow individuals to avoid home foreclosure. Chapter 13's automatic stay halts foreclosure proceedings right when the individual files for a bankruptcy petition. Afterwards individuals are allowed to bring overdue payments current over a generally accepted length of time. However, it is important to note that there is a possibility that the debtor may still lose their home if their mortgage company finishes the foreclosure sale before the debtor opens a case under state law. Another cause for losing the debtor's home is if the debtor fails to make consistent mortgage payments due after the bankruptcy filing.
Chapter 13 trustees will hold a creditors meeting after the debtor files the petition. This meeting will be generally held 21 to 50 days after the petition filing. In the case that the bankruptcy administrator or U.S. trustee arrangements a meeting that does not include the attendance of bankruptcy administrator staffing or regular U.S. trustees, the meeting must be held sooner than 60 days after the petition has been filed. The proceedings of this will include the trustee placing the debtor under oath. Both trustee and creditors are free to ask questions. It is mandatory for the debtor to be present during the meeting and reply to inquiries concerning their financial standing and the details of the proposed arrangement. If married couples choose to file a joint petition, both must be present during the creditors' meeting and answer questions.
If a husband and wife file a joint petition, they both must attend the creditor's meeting and answer inquiries. Bankruptcy judges are not allowed to attend creditors' meetings in order to preserve their own unassociated judgment. Parties generally resolve dilemmas during or right after creditor's meetings. Debtors are able to avoid these dilemmas beforehand by ensuring the arrangement and petitions are complete and accurate. They can also seek advice from the trustee before the meeting.
To partake in distributions from bankruptcy estates, unsecured creditors will file claims through the bankruptcy court no later than 90 days after the first set creditors' meeting date. A government unit will have 180 days from the filed date to file a proof of claim.
The debtor, creditors who wish to attend, and the chapter 13 trustees will attend a court hearing on the debtor's repayment arrangements.
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