Chapter 13 Bankruptcy Process
There is certain information you will need to gather before filing for Chapter 13 bankruptcy. The information you need to gather includes:
- a list of all creditors and the amount and nature of their claims;
- description of your income, including source, amount, and frequency;
- paystubs received within the last 6 months;
- Federal & State income tax returns for the last 2 years;
- a list of all your property (e.g. vehicles, real estate); and
- a list of your monthly living expenses, including food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
If you are married and living together, you must gather this information about your spouse even if you are not filing a joint petition with your spouse. This is so that the court can evaluate your overall financial condition. If you are separated or living together unmarried, the non-filing spouse or significant other need not prove their income.
Next, before filing for bankruptcy, you are required to go to credit counseling and obtain a credit counseling certificate. You must obtain your credit counseling from a counseling agency that is on the government’s approved list. There is a fee for credit counseling, but the company providing the counseling is required to make sure you can afford the fee, so it will be based on your ability to pay.
To start your bankruptcy, you will file a petition for bankruptcy along with some or all of the following documents:
- list of assets
- list of liabilities
- list of current income and expenses
- statement of financial affairs
- list of contracts and leases
- copy of the tax return or transcripts for the most recent tax year
- proof that you went to credit counseling
- copy of any debt repayment plan you made in credit counseling
- evidence of payment from your employer received 60 days before filing
- statement of monthly net income and any anticipated increase in income or expenses after filing
- record of any interest you have in education or tuition accounts
- list of exempt property
There are fees you must pay in order to file for bankruptcy. For instance, there is a case filing fee, an administrative fee, and a trustee surcharge. These fees can sometimes be paid in installments or waived entirely if your income is not enough to pay the fees.
When you file your bankruptcy petition, the “automatic stay” goes into effect and prevents most of your creditors from trying to collect on the debts. Your creditors will not be allowed to file or continue a lawsuit against you, garnish your wages, or call you to demand payment. In a Chapter 13 bankruptcy, the automatic stay also protects any co-debtors if the debt is a consumer debt.
The creditors you identified in your bankruptcy petition will be notified of the bankruptcy directly by the court. Unsecured creditors will need to file a “proof of claim” in your bankruptcy proceeding in order to participate in the proceedings and get their debt paid. After you file for Chapter 13 bankruptcy, the court will appoint a trustee to handle your case.
Your first monthly plan payment to the trustee is due 1 month after filing.
When the bankruptcy trustee is appointed, there will be a meeting of your creditors about a month after the appointment of the trustee. You must submit to the trustee copies of paystubs received within 60 days prior to filing, together with a copy of your last tax return and either an appraisal or a Broker’s Price Opinion (BPO) for any real estate. Appraisals are waived if a 100% plan is proposed. You are required to attend the meeting of creditors and produce your original photo ID and original social security card. During the meeting, you will be placed under oath and asked questions by the trustee and by any creditors that attend the meeting. They will ask you questions about your financial affairs and about your repayment plan.
The meeting of creditors will be followed by a hearing regarding your repayment plan to make sure all your debts will be sufficiently paid off or at least paid down. This is called the “Confirmation Hearing.”
Legal Editor: Thomas M. Denaro, March 2015
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.