What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is applicable to debtors whose household income surpasses the median income required to file a Chapter 7 bankruptcy. Chapter 13 bankruptcy filers have to propose a payment plan to the Court indicating how all or a portion of their debt will be repaid over time with future income. A Chapter 13 bankruptcy may also prevent foreclosure on a home, give you the opportunity to catch up on missed mortgage payments, prevent interest accumulation on tax debt, and even safeguard valuable non-exempt property.
What is a Chapter 13 bankruptcy filer’s responsibility?
When you file a 13 Chapter bankruptcy, you enter into several legally imposed obligations. Firstly, a bankruptcy petition must be submitted to the Court. There is also a Court filing fee that must be paid when you file your petition. Thereafter, you have to propose either a 3-year or a 5-year payment plan clearly indicating how outstanding debt will be repaid using disposable income. Once your Chapter 13 bankruptcy plan is confirmed, it is recommended to make the monthly payments in full and on time. If your Chapter 13 bankruptcy plan is adhered to, any remaining balances on outstanding debt may be discharged at the end of the plan.
What is a Chapter 13 bankruptcy payment plan?
A Chapter 13 bankruptcy payment plan allows debtors with a regular source of income to pay back debt. The plan has to satisfy the following requirements:
- It must be delivered in good faith.
- The plan must demonstrate the debtor’s ability to have sufficient disposable income available to contribute toward the plan. It must also clearly depict how left over funds will be distributed among your creditors.
- Unsecured debtors must be paid, at the very least, just as much under a Chapter 7 bankruptcy filing.
- It must also indicate that all disposable income will be paid into the plan.
What is A Chapter 13 Bankruptcy Trustee?
In a Chapter 13 bankruptcy filing, bankruptcy Trustee is responsible for ensuring that your Chapter 13 bankruptcy proposed payment plan satisfies the legal requirements, as well as to receive your monthly payments and ensure that it is distributed among creditors. The Trustee also has the authority to monitor your tax returns.
What is a Chapter 13 Bankruptcy Confirmation Hearing?
During your Chapter 13 bankruptcy confirmation hearing, the debtor explains to the judge why the payment plan should be approved and finalized. Creditors may attend and object the plan. Although there may be no objection to the plan, the Judge may ask you questions about the plan. Although some issues may involve complicated legal issues, most of the discussion at the confirmation hearing focuses on how much creditors should be paid.
What is a Chapter 13 Bankruptcy Lawyer?
A Chapter 13 bankruptcy lawyer will work with you to prepare your bankruptcy petition and will also ensure that your payment plan meets the legal requirements. Furthermore, if any discrepancies arise at the confirmation hearing, your lawyer will be there as your legal counsel.