Chapter 13 Bankruptcy is significantly different than filing a Chapter 7 Bankruptcy. Chapter 13 bankruptcy is a limited repayment plan. It requires the debtor to make payments based on what the debtor can afford for between 36 and 60 months.
Deciding Whether to File Bankruptcy
Before delving too deeply into the Chapter 13 Bankruptcy process, the first step is to decide to file bankruptcy. This is a very personal decision. However, we organized a list of Eight Indicators that can help lead to a decision.
What Is Chapter 13 Bankruptcy?
A Chapter 13 Bankruptcy is called a reorganization. It’s more like the bankruptcies you hear on the news for things like GM. It’s a monthly payment for the next 3-5 years. You are required to file Chapter 13 if you are over median income or if you have filed a Chapter 7 within the last 8 years.
How Does Chapter 13 Bankruptcy Work?
The first step of filing Chapter 13 involves a data collection period requiring the filling out of our questionnaire. After we receive the questionnaire, we will have to determine a payment plan. After doing all of that, we will fill out all of the paper work and file it with the court. The next step is to attend a meeting with the creditors and a court-appointed bankruptcy trustee. There are filing fees of $335. This is paid to the Arizona district of the bankruptcy court located in either Tucson or Phoenix.
The best thing about Chapter 13 Bankruptcy is that you can reduce your car payments and also pay off taxes through the plan. Typically, the things that are usually paid through Chapter 13 Bankruptcy are financed cars, tax debts, attorneys’ fees and the trustee’s percentage of 10%.
Before filing for bankruptcy you must complete a credit counseling program with an approved agency. This must be done no more than six months before you file, and can be done over the phone or internet and costs approximately $10. There is a fee of $335. There are several approved agencies in that we use in Arizona for both the Phoenix and Tucson courts. These will be explained in our introductory e-mail to you.
Your particular situation may influence the timing of filing for bankruptcy. While it is often an advantage to file as soon as possible (to stop a foreclosure, repossession, lawsuit or even eviction), there may also be circumstances to delay. This is the reason for our in-depth analysis during your free initial consultation.
The federal bankruptcy courts use official bankruptcy forms. The basic form that must be prepared to file for Chapter 13 bankruptcy is the Voluntary Petition. Along with the Voluntary Petition, you will need to prepare numerous other forms, which support the Voluntary petition. It lists your property, debts, income and expenses. It is important to list all creditors and their accurate mailing addresses.
Filing with the Bankruptcy Court
Your forms will be filed with the bankruptcy court clerk. The typical practice is to file all of the forms at the same time; however, in an emergency (such as needing to immediately stop a foreclosure, eviction, or car repossession) it is permissible to file just the two-page Voluntary Petition, and file the other forms within fourteen days. This is what we do for those filing either for an emergency or for the payment plan. Once you file the Voluntary Petition, you have turned over control of your property and debts to the court. You may not transfer any property or pay any debts without the approval of the court. It also starts the automatic stay. The automatic stay stops all financial and civil legal proceedings going against you.
The payment for your Chapter 13 Bankruptcy is due 30 days after the day of filing. It can be paid automatically online through a company called TFS. This payment will be the amount as proposed by your plan. It will continue until the Stipulate Order Confirming the Plan (talked about lower down) is entered by the court, at which time it will change to your final payment plan.
Meeting of Creditors
The meeting of creditors is about a 5 minute meeting that is designed to determine that you are who you say you are and to have you swear under oath that everything is true and complete to the best of your knowledge. It is conducted by one of the 2 some odd different Phoenix Trustees and the 1 Tucson Trustees.
It is held about 4-6 weeks after filing and if you want more details, please check our page on the Meeting of Creditors.
Within 45 days of the meeting of creditors, the Trustee is required to submit the Trustee’s Recommendation (also known as the Trustee’s Objection). This document lists the actions and problems the Trustee believes needs to taken and/or corrected as part of the Bankruptcy Process. Often, there is a lot of negotiation done in this period. Once the negotiation is completed our Bankruptcy Lawyers submit the Stipulated Order Confirming.
Stipulated Order Confirming Plan
This is the confirmation of the plan and completes the Chapter 13 Process until the discharge is completed. It is required for your Bankruptcy Attorneys, the Chapter 13 Trustee, any objecting party and the Debtor to sign the Stipulated Order Confirming Plan prior to its submittal and approval by the court. This is the last step until your discharge.
Approximately3-5 years after the after filing you will receive your bankruptcy discharge. There is one final step and it’s the certification of plan completion. This document just says that you completed the plan and apply for discharge. Once the discharge is entered your bankruptcy case ends.
See if Chapter 13 bankruptcy is right for you with a call. Book a call here.