Chapter 13
Chapter 13 reorganizes your debts in a way that allows you to pay back mortgage arrears, tax debt and your secured creditors first and your unsecured creditors (e.g. credit cards) second. In many instances most of your monthly plan payment to the US Trustee is used for mortgage arrears and only a small fraction is left over for your unsecured creditors. At the end of your Chapter 13 plan you receive the same discharge that you would have in a Chapter 7 only you are allowed to keep all of your property.
Chapter 13 gives you the chance to stop a foreclosure and catch up on the arrears. It can stop wage garnishments, bank attachments, liens and levies (even IRS tax levies). It also has a special provision that protects co-signers or people who have guaranteed your debts from collections during your case.
A Chapter 13 starts when your petition is filed with the Court. Documents relating to income and expenses, debts, property (real estate as well as personal property) and other financial disclosures must be prepared and filed.
Filing a petition under Chapter 13 stops all collection actions; this is known as the automatic stay. Foreclosures, garnishments, attachments, lawsuits, collection calls and letters, and even regular monthly bills are stopped. Under some circumstances the automatic stay may exist for only a short period of time with respect to certain assets. You may then use the Chapter 13 Plan to bring past-due payments current over time, usually five years.
About six weeks after you file the petition, the Chapter 13 trustee will hold a meeting of creditors. About a month after the meeting of creditors is the Confirmation Hearing. At the Confirmation Hearing, we ask the Court to approve your Chapter 13 Plan. If your Chapter 13 Plan is approved, as long as you make your monthly trustee payments, you're fine. If it isn't approved the first time, we submit an Amended Plan, and have a new Confirmation Hearing.
A successful Chapter 13 bankruptcy involves filing a Plan and sticking to the Plan. When we work together you can be sure that your Chapter 13 Plan will be as effective as possible. If there is a problem that prevents you from making Plan payments you need to let me know so that we can consider your options. Remember, a Chapter 13 Plan is a living entity — if you lose your job, suffer a change in circumstances or just misjudge your ability to make payments, there are often things that we can do to make it work for you.
For information or counsel on your bankruptcy needs, please contact us for a free consultation.
