A Chapter 13 bankruptcy is quite complicated and should be filed with an
attorney. In a Chapter 13 Bankruptcy, a debtor
is able to reorganize his/her debt and catch up on payments that may have
fallen behind, such as a house payment. Unlike
Chapter 7, in a Chapter 13, a Second Deed of Trust on real property may be
determined to be unsecured and eventually removed if the debtor can prove to
the Court that what is owed on the First Deed of Trust is more than the current
fair market value of the real property.
Chapter 13 bankruptcy is also designed for debtors with regular income who
would like to pay all or part of their debts in installments over a period of
time. Pursuant to 11 U.S.C.
§109(e), in order for a debtor to be eligible for a Chapter 13, on the date of
the filing of the petition, noncontingent, liquidated, unsecured debts must be less
than $383,175 and noncontingent, liquidated, secured debts must be less than
a Chapter 13, a debtor files a plan for approval with the court. The debtor will usually make monthly payments
for a period between 3 and 5 years to a court appointed trustee who distributes
the proceeds to the creditors. The
amount of the payment is based on the amount of the debtor’s income and debts. The present value of the plan must exceed the
amount unsecured creditors would receive in a Chapter 7 liquidation.
the debtor presents a plan for repayment, it is reviewed by the Chapter 13 Trustee,
the creditors, and the Bankruptcy Court.
The plan must provide creditors with an amount at least equal to what
they would receive under a Chapter 7 filing, and must be feasible based on the
debtor's income. If the plan is
approved, the debtor makes payments to the Trustee, who then pays the
5-8 weeks after the bankruptcy petition is filed with the Court, a 341 (a)
Meeting of Creditors will be held. At the meeting, the Trustee will ask
the debtor questions about the debtor’s financial affairs and accuracy of the
petition and schedules. The Trustee will also address any issues he may
have with the proposed plan. Creditors have the right to be present and
ask questions regarding assets and liabilities; however, it is rare when
creditors do appear at the meetings. After
the meeting is concluded, the confirmation hearing will take place thereafter.
completing the payments under the plan, the debts are generally discharged
except for domestic support obligations, most student loans, certain taxes,
most criminal fines, criminal restitution obligations, certain debts which were
not properly listed in the bankruptcy schedules, certain debts for acts that
caused death or personal injury, and certain long term secured obligations.
The court filing fee for a Chapter 13 case is $310 (this fee changes
periodically). The attorney fees for a
Chapter 13 case depend on complexity of each case. Generally, a portion of the fee is paid
before the filing of the Chapter 13 bankruptcy, and the balance of the attorney
fee is paid through the Chapter 13 plan. During your free consultation you will
be quoted an exact fee.
(1) Debtors remain under court supervision for the life of the plan (up to five
years), and are forbidden to make new debts or sell assets without court
Debtors who propose less than full payment to unsecured creditors will be
forced to live on a budget for the life of the plan and may have to pay all
excess income to the creditors (including tax refunds).
If the debtor doesn’t complete the plan payments, then any creditor may petition
to have the court convert the case to a Chapter 7 liquidation.