Chapter 13 Bankruptcy
Chapter 13 Bankruptcy in general is a tool to stop foreclosure proceedings by allowing you to play catch up on mortgage debts or to consolidate all of your debts, including late ones over a 3 to 5 year span. This may make your monthly payments lower and depending on your situation a majority of you unsecured debts can be removed. Also, it can be used as a way to possibly get rid of an “underwater” 2nd or 3rd mortgage.
How do I know if I’m eligible?
1. Complete credit counseling up to 180 days of filing
2. No more than $360,745 of unsecured debt
3. No more than $1,081,400 of secured debt
How does it work?
1. File a petition with your local bankruptcy court
2. A complete list of assets, liabilities (a list of all creditors), income (must be able to prove with statements), monthly expenses, schedule of executory contracts and leases in effect for the 60 days prior to filing. You’ll also need astatement of financial affairs, a certificate of any debt repayment plans, tax returns for most recent year, any interest you have in a federal or state qualified education or tuition account and any expected increase in income or debts after you file.
3. Within 15 days of filing your petition you are required to submit a plan for court approval
4. Whether or not you’ve been approved by the court you must start making payments to the trustee within 30 days of filing. If your plan hasn’t been approved yet and you have a secured loan (home, car etc) that is supposed to be paid before the 30th day of filing then make a payment directly to that creditor and subtract that amount from your monthly payment to the trustee.
5. A court appointed trustee will be in charge of collecting payments from you and distributing them to your creditors
Can I file jointly?
A husband and wife may file jointly or as individuals. However, if you are married you must include your better half’s income and expenses so the court can get a solid idea of the household finances.
How much does it cost?
$235 – filing fee
$39 – administrative fee
$274 – Total
Can I pay in installments?
You may pay in up to 4 installments with the last payment 120 days after you file. In some cases the court will allow up to 180 days after you file. Make sure to pay or else the court can dismiss your case.
How long does it take?
1. Within 60 daysof you filing you, your creditors and the court appointed trustee will meet up to discuss your bankruptcy plan. Either while at this meeting or very shortly there after a resolve will be agreed upon.
2. No later than 45 days after that meeting will the bankruptcy judge approve or deny your plan.
3. Your creditors have 25 days after the judge’s decision to object to the plan. If the judge agrees with your creditor and objects to your plan then you may request a modification of your plan. If the judge ultimately dismisses your case the trustee must return all of your money to you.
How does it end?
If you have fulfilled the terms of your bankruptcy then at the end any outstanding eligible debts will be discharged.
To learn more about chapter 13 bankruptcy got to: