How to File Chapter 13

Filing bankruptcy is never a pleasant experience, but it's something you might have to do if your back is up against the financial wall.
Before you dive into the process, it's important to understand how to file chapter 13 bankruptcy so that the procedure is smooth and seamless.
This guide explains what you need to know about this type of bankruptcy. Read on to get some helpful tips and information as you consider making the move.

What Is Chapter 13 Bankruptcy?

There are several different forms of bankruptcy you can file for, and chapter 13 is a common choice for many consumers.
Unlike chapter 7, chapter 13 allows you to essentially "reorganize" your debt and finances instead of eliminating them completely. You're able to keep your home and pay your mortgage when you file this type of bankruptcy. You can also keep your car, which can be a lifesaver for many people.
Monthly payments are set up as you pay off your debtors, but these payments are agreed upon and then established through the courts. In most cases, the process lasts for about three years until the debts are fully paid.
The money you pay will go to a trustee, who then distributes it to your creditors. It makes repayment much easier for you and guarantees that your debts are paid without you having to keep track.
Once the debts are paid, it results in discharge. This means your debts are considered paid off, and you can move on with your life.

The Automatic Stay

Under chapter 13 bankruptcy, you can request something called an automatic stay. This is a court order that stops anyone who is trying to collect from you from harassing you or contacting you.
Throughout the automatic stay period, your wages cannot be garnished, and no levies can be taken on your bank account. Your home cannot be foreclosed on, and your car cannot be repossessed.
This benefit alone can give you peace of mind since you're already under financial stress as you work to repay your debtors. With an automatic stay, you are also protected against any form of a civil lawsuit that would result in a money judgment. You will no longer receive annoying letters, phone calls, and other forms of collection tactics which can be a huge relief. This benefit alone can be of great help to anyone considering filing for a chapter 13 bankruptcy.

Before You File

Before you decide if this form of bankruptcy is right for you, it's important to know if you're eligible.
Chapter 13 places limits on the amount of debt you owe and certain forms of debt may not apply. A few examples include some taxes, mortgages, and domestic-related support arrangements.
In some cases, your income may not be enough to cover the required payment amount. When this happens, you might not qualify for chapter 13.
You will also need to determine how much property you own and if that property is protected through various bankruptcy exemptions. You will be able to keep your property but you must still pay specific creditors an amount that is equal to the value of anything that is considered nonexempt.
When you file, the nonexempt properly value will be included in the amount you pay through the bankruptcy filing. And finally, your income has to cover all of your monthly living expenses in addition to the debt repayment amount included in the final plan. If your income falls short, the courts may not allow you to proceed with the bankruptcy. It's a good idea to speak to a lawyer who specializes in bankruptcy so they can go over the numbers with you to determine whether or not you qualify.

How to File Chapter 13: Starting the Process

Once you've decided that filing chapter 13 is right for you and you're fully eligible, it's time to begin the process.
First, you will need to enter all your current financial information into an official bankruptcy form.
The form will set up your repayment plan and get your information prepared for the courts. You'll also need to take a pre-filing course. This credit counseling course is mandatory, and you'll receive a certificate of completion when you finish. The course completion certificate must be included with your official bankruptcy paperwork. After you have all the needed paperwork, you can file them with the bankruptcy court.
The court will begin the process and you'll need to pay a separate fee to have all of your information filled out and submitted correctly. After you do this, your trustee will get all of your documentation that proves your income and assets.
Once the paperwork is completed, it will be verified against your bank statements, tax returns, pay stubs, and other documentation. You must produce these documents, also known as 521 documents to the trustee.

The Bankruptcy Hearing Process

After you've filed everything, you will need to meet with your bankruptcy trustee a few weeks later.
They will be the person in charge of your case and will help you deal with your creditors.
The trustee will go over everything you've provided to verify that it's all correct and up to date. They will sit down with you during the hearing and help to speak on your behalf.
You should know that your creditors may also be in attendance at the hearing or meeting. Your attorney will also attend a confirmation hearing where a bankruptcy judge decides whether or not to approve your repayment plan.
Any creditors who are at the hearing have the right to object your filing by a motion of opposition with the court. These motions are usually in written form, and the judge will consider them carefully.
Once everyone has made their case and presented all of the proper paperwork, the judge will either confirm the plan or deny it. It's important to be fully prepared when you attend your chapter 13 bankruptcy hearings.
A professional attorney is essential to a successful filing since they have the experience necessary to navigate the process. Your attorney will guide you as you submit documents, speak to the judge, and deal with the trustee.

What to Do Once Bankruptcy Is Filed

You've learned how to file chapter 13 bankruptcy, qualified, and submitted all of your paperwork. The court has approved the bankruptcy and everything is official. Now what do you do?
Most importantly, you absolutely must start to repay your creditors based on the agreed-upon plan. These payments must start within 30 days of the official filing. If you miss any payments, the courts can and usually will dismiss your case. Make sure that your payments are set up to be paid automatically through the trustee. You'll need to revamp your budget to accommodate the new bankruptcy payments. Just remember that with chapter 13, the entire process shouldn't last longer than three years.
Before you complete the repayment plan, you will also need to take a post-filing course. This course is similar to the first course in that it's related to credit education. After the course is complete, you will receive an official certificate.

Getting the Bankruptcy Discharge

If you do everything by the book and pay as agreed and complete the course, you will be eligible for a bankruptcy discharge.
This will relieve you of your obligations to pay any unpaid balance on most qualifying unsecured debts.
Keep in mind that unsecured debts like student loans are not able to be discharged. But, as long as you continue to pay as agreed upon and all payments are cleared, you're officially discharged from bankruptcy.
There could be some cases where you may need to return to court even if your bankruptcy is official. An example would be if you take a new job that pays less and results in a lower income.
If that happens, you can ask the court to reduce your payments. They may not approve the reduction, but it's worth asking especially if you need more cash flow to live and pay your bills.
Filing bankruptcy is not an easy process, but it's something that many people take advantage of to help them recover from extreme debts. Always talk to an attorney before you file so you're sure that everything is done correctly.
Remember that some obligations such as tax debt or child support are not included in your discharge. You'll need to repay those as required in order to avoid collection measures.

Life After Bankruptcy

Once you understand how to file chapter 13 bankruptcy, you can decide if this process is right for you.
Filing bankruptcy should be a last resort, but it's a good protective measure to help you keep your valuable assets such as your vehicle and your home.
Consider talking to an attorney who specializes in chapter 13 so they can help you through the process step-by-step. Be prepared to show proof of your income and debts as well as attend some credit courses and court hearings.
If you're looking for a bankruptcy attorney you can trust, contact us today and visit our website for more information.

Contact Us for More Information

When you need assistance in filing for Chapter 13 bankruptcy, call the trusted lawyers at the Callahan Law Firm in Kansas City at 816-822-4041.