Chapter 13 Bankruptcy Information

Chapter 13 Eligibility

While often called the wage earner's plan, anyone, including those who are self employed, are eligible for Chapter 13 bankruptcy as long as they have $336,900 in total unsecured debt and less than $1,010,650 in total secured debt. Unsecured debt is most commonly credit cards and revolving accounts. Secured debts are those like a mortgage or automobile loan. There is also a pre-filing credit counseling requirement, as well as a limit on prior bankruptcies. To be certain that your circumstances meet the eligibility requirements of Chapter 13, make an appointment with a bankruptcy attorney who can help you determine if this chapter works for you.

Understanding the basics of Chapter 13

Over a period of five years, and sometimes even in as little as three years, Chapter 13 allows a person to pay off a portion of their debt including past due payments on a home loan or car loan. Whether its 36 or 60 months depends on whether your income is above or below the "median income" level. A bankruptcy attorney can determine this for you and advise you if utilizing Chapter 13 is right for you. If you file, all collection and repossession actions by creditors should stop immediately under the automatic stay. You will be allowed 36 or 60 months to catch up on your payments and a portion or all the balance may be discharged at the end of the term. A bankruptcy attorney in your area can help you, determine of what is dischargeable in a Chapter 13 bankruptcy.

How Chapter 13 Bankruptcy Works?

A bankruptcy attorney can walk you through every step of the Chapter 13 bankruptcy process. It generally starts with filing a voluntary petition, schedule of assets and schedule of liabilities, schedule of income and expenditures and similar related documents. Additionally, the last three years of tax filings is needed along with proof of income and evidence that the pre-counseling requirement has been met. Married couples may file joint petitions.

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Immediately upon filing all collection activity, creditor harassment and repossession efforts should stop. This is known as the automatic stay and creditors who violate it face serious consequences including penalties to you. You will be appointed a trustee and within 20 to 30 days there is a meeting with your creditors and you must provide proof of social security and photo identification in addition to the various schedules. It' is important to work closely with the Trustee.

In several months there will be a Plan Confirmation Meeting. Your attorney and Trustee will determine if you need to attend. This meeting confirms everything that has been agreed to with your creditors. Following your Plan Confirmation, you continue to make the agreed monthly payments until your plan is completed. If unforeseen circumstances happen, your plan may be able to be modified to deal with the changes. At the end of your Plan you should be formally discharged and return to your everyday routine. While this process can be complex, a bankruptcy attorney can guide you through it while helping to minimiz any stress.

Steps for Filing Chapter 13

1. Make an appointment with a bankruptcy attorney and let him explain your alternatives, determine your eligibility and answer your questions.
2. Pull together and turn over to the bankruptcy attorney the required documentation so they can effectively make your case.
3. Once you have filed, you will be notified of two meetings: one with your trustee and one for your plan confirmation. Be prepared to attend both.
4. Make the agreed to payments under your plan for the length of time agreed to.
5. Complete your plan and be discharged.
6. Return to and enjoy your life!