Chapter 13 Bankruptcy: Filing Your Petition

A Chapter 13 Bankruptcy commences with the filing of the petition, schedules, and Plan with the Bankruptcy Court in your particular jurisdiction. Your jurisdiction is determined based on your residency in the jurisdiction for 91 of the last 180 days or a substantial asset of the estate. A husband and wife may file a joint petition or individual petitions.

The filing fee currently to file a Chapter 13 Bankruptcy Petition with the court is $194.00. This must be paid over to the court at the time of filing.

Emergency Petition

It is possible to file an Emergency Petition. These are normally filed electronically so the docket number, and thus the Automatic Stay which is bankruptcy court protection of your assets, from your creditors, is obtained immediately.

Household Income

The code requires that household income be listed in you bankruptcy schedules. Therefore, you should tell your attorney about anyone in your household that has additional income and expenses in your household.

Bankruptcy Trustee

A bankruptcy trustee is appointed upon the filing of a bankruptcy petition. He or she is essentially the administrator of the entire case. The primary roles of the Chapter 13 Trustee are to review petition for accuracy, disclose and advise the court, collect the proceeds from the debtor, and distribute the proceeds to the creditors pursuant to the judge's confirmation order.

Automatic Stay

Upon the filing of the petition with the court, the debtor receives a stay automatically protecting him or her from their creditors. This stay stays in affect pursuant to 11 USC 362 or the confirmation order of the court for the duration of the case unless the court orders otherwise.

Repayment Plan

The debtor must file a plan of repayment with the petition or within 15 days thereafter unless extended by the court for cause. The Chapter 13 Plan must provide for full payment of Priority Unsecured Claims and some Secured Claims depending on the value of the security. Furthermore, the plan must provide for the treatment of each class of creditor, interest if applicable, and leases if applicable.

Meeting of Creditors

A Meeting of Creditors is required to be held in every case. You and your creditors are sent a notice describing the date, time, and place of the meeting where creditors can question the debtor along with the case trustee. The examination is held under oath and is normally scheduled 20-50 days after the petition is filed. The debtor must attend the meeting and any creditors that appear may ask questions of the debtor regarding the debtor's financial affairs and the proposed plan. If a husband and wife file a joint petition, they must both attend the Creditors' Meeting. If the trustee believes that there are problems with the plan and that the court will not confirm the plan, a compromise is normally worked out during the Creditors' Meeting. Generally, problems are avoided when all information is provided to the bankruptcy attorney, and the bankruptcy attorney files accurate papers with the court.

In a Chapter 13 case, creditors who want to be paid through the Chapter 13 must file Proofs of Claims with the court within 90 days after the first meeting of Creditors. However, governmental units may have up to 180 days from the date the case is filed.

Normally, the Chapter 13 Trustee will distribute to the debtors a 6-month report indicating the status of each creditor that the debtor has listed. If the report states, "not filed," this means that the creditor has not filed a proof of Claim , therefore, they will not be paid. If the Creditor is a non-priority unsecured creditor, this is good news because it will save the debtor money. However, if this is a Priority or a Secured Creditor, you should contact your attorney immediately because it may be in your best interest to have your attorney file a proof of claim on the creditors behalf so that they would be paid. The purpose would be so that the debt does not survive the bankruptcy.

Immediately after the meeting of creditors is concluded, the case normally goes before the bankruptcy judge for a confirmation hearing. The judge reviews the case and the trustee advises the court of his or her position. The court normally has the debtors placed under oath and asks the debtors additional questions. The court wants to determine if the plan is feasible and meets all the standards for confirmation set forth in the bankruptcy code.

Normally, it is still possible for creditors to object to there treatment; however, it is the norm for their objection to have already been resolved at the creditors meeting. It is possible to modify a confirmation order due to changes in circumstances or to list an additional creditor. In such instances, the plan may be modified either before or after confirmation. Modification after confirmation is limited to an initiative by the debtor.

Plan Payments

Pursuant to the code, the first Chapter 13 Plan payment must be made to the Chapter 13 Trustee within 30 days of filing . This is true even if the case has not gone to court. The purpose is so that the plan does complete within the required time frame pursuant to the code. Because certain assets are depreciating, it is possible for creditors to ask for "adequate protection payments". If the payments have been made, these funds are available for the adequate protection payment so that the debtor can keep that particular asset. Further, the funds build up in the trustee's account so that once the confirmation order is entered by the court, the funds can be distributed pursuant to the approved order.

Bankruptcy Discharge

The Chapter 13 debtor(s) is entitled to a discharge upon successful completion of all the payments under the Chapter 13 plan. A discharge has the effect of releasing the debtor all debt provided for by the plan or order otherwise. Secured and priority creditors who receive payments pursuant plan and unsecured creditors that were put on notice may no longer initiate or continue any type of collection activities as these debts have been discharged.

Once the discharge is received, a creditor holding a lien on a vehicle that has been paid pursuant to the bankruptcy order of the court must provide the debtor with a discharge/satisfaction of lien.