In a Chapter 13 case, instead of turning over the property for a trustee to sell, the debtor makes payments for 36 to 60 months to a Chapter 13 trustee who distributes the funds to creditors who have filed claims that the court agrees are proper.
Before filing a Chapter 13 Bankruptcy stated in the USC Code there are two provisions one must fall under. The first is that the person filing must have less than $336,900 in unsecured debt. In addition, they must have less than $1,010,650 in secured debt. Second, the petitioner can’t have a Chapter 13 that was dismissed for any of the following reasons:
- “Willful failure” to appear in court
- Failure to comply with the Court
- Voluntary dismissal after creditors asked the court to recovery property that still had a lein.
How Does the Chapter 13 Filing Process Work?
The first step in filing for Chapter 13 bankruptcy is submitting a petition. The petition file must include:
- Completed schedules of assets and liabilities
- A schedule of current income and expenses
- A listing of all creditors
- Financial statements
- Evidence for complying with the means test
- A certificate of credit counseling
- Proof of payment (6 months)
- Bank statements
- Car information
- Mortgage information
- Title and deeds to property
- A tax transcript
- Any other affidavit to certify income and expenses.
Within 30 days of filing, the debtor has to start making the proposed payents. This is true even if the plan has not yet been confirmed by the court.
The debtor also has to keep paying “post-petition” payments on all secured assets that they want to keep. (i.e. car payments and mortgages, and ordinary and necessary expenses for living; i.e. rent, utilities, etc.) The bankruptcy court is then required to hold a confirmation hearing within 45 days of meeting the creditors. The purpose of the hearing is to decide if the proposed repayment plan meets bankruptcy standards. Within 45 days after the meeting of the creditors, the bankruptcy court must hold a confirmation hearing. This is done to decide if the debtor’s repayment plan meets confirmation standards. Confirmation standards are found in the Bankruptcy Code 11 U.S.C 1324 and 1325. If the court confirms the plan, the Chapter 13 trustee will distribute the money paid by the debtor.