What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often referred to as a reorganization of debts. It is a legal debt solution that provides for a debtor to repay a portion or all of their outstanding debt based on their income and budget. A Chapter 13 bankruptcy filing is ideal for an individual facing a repossession or foreclosure who wants to maintain possession of an automobile or home. Chapter 13 can also be a budget relief for debtors who have an overwhelming amount of student loan debt. Chapter 13 can help a debtor repay arrears for child support payments or taxes who is unable to pay the total amount past due all at once.
To qualify for a Chapter 13 bankruptcy, the debtor must be able to show that they have a source of income. The source of income can be employment income, earned commissions, pension payments, Social Security benefits, unemployment benefits, child support or alimony, royalty payments and/or other sources of income.
Reorganizing debt under Chapter 13 bankruptcy may be the right option for you. Contact CaJacob Law Group for a free consultation to discuss not only Chapter 13 bankruptcy but all of the options you may have available to you.
How does Chapter 13 bankruptcy work?
Similar to filing a Chapter 7, at CaJacob Law Group the Chapter 13 process starts with the initial consultation. At this appointment, the attorney meets with the client to review their specific situation. Every case is different. After discussing the client’s situation, the attorney will explain the client’s option and recommend the best legal debt solution. We’ll discuss the what documents, fees and credit counseling is required before Chapter 13 can be filed.
After all of your documents and fees are provided, we’ll have a second appointment. At this time, we’ll review the documents we’ve prepared for you to see if we need to make any corrections and to make sure you understand what we are submitting to the court on your behalf. We’ll go into every detail to make sure we have all of your information correct. These documents include the bankruptcy petition and schedules that the bankruptcy laws require to file a Chapter 13 case. The documents also include the Chapter 13 plan, which is the document that we submit to propose your repayment plan. Once we’ve got everything right, you’ll sign the bankruptcy paperwork. At that time the case can be filed.
Once the bankruptcy case is filed, a Chapter 13 bankruptcy trustee is assigned. The Chapter 13 trustee will oversee the case, collect regular payments from the debtor and distribute funds to the creditors. The job of the trustee is to see that your creditors are paid as much as possible toward the debts you owe them. Shortly after your Chapter 13 case is filed, a time a date will be set for your hearing with the Chapter 13 trustee. This hearing is called the Meeting of Creditors. The hearing is a short, relatively informal meeting where the bankruptcy trustee (and any creditors who wish to appear) ask the debtor questions. Although all creditors receive notice of the hearing, most creditors choose not to appear.
Payments on the debtor’s repayment plan are due every month or every pay period. The first payment is due no later than 30 days after the case is filed. Payments to the Chapter 13 trustee are made either by mail, electronically or via payroll deduction.
There is a short waiting period, kind of like a probation period when creditors and/or the Chapter 13 trustee can object to the repayment plan we’ve proposed. In most cases, these objections are related to administrative issues the creditor or trustee has with the plan and the objections can be resolved quickly. Once we’ve passed that waiting period and made any adjustments necessary to make the plan feasible, the Judge will approve your Chapter 13 plan. After court approval, the case becomes fairly routine. The debtor makes regular payments. The trustee distributes regular payments. If something comes up that makes it so the debtor cannot make their payment, they would want to contact CaJacob Law Group to discuss their options with making changes to their Chapter 13 plan. Changes can be made to your Chapter 13 plan during the three to five-year repayment term. The terms of the plan aren’t set in stone. Life happens. Most likely something will change in your life over the term of the plan. Your CaJacob Law Group attorney here to help you through the entire process. After you have completed your payment plan, a discharge order will be issued by the court. This is, for all practical purposes, the completion of your case.
Our Team is Here to Help
Chapter 13 bankruptcy can be an intricate, yet very helpful, process. Please contact us to go through that process with you. CaJacob Law Group is here to help.