How Does a Chapter 13 Work?

31 Oct How Does a Chapter 13 Work?

When you file a Chapter 13 bankruptcy case, you are required to file several forms with the bankruptcy court. Among other things, you must list your income and expenses, assets, debts, and property transactions. The key to the Chapter 13 filing, is your proposed repayment plan.In your proposed plan, you describe how you intend to repay your debts over the next 3 to5 years.

A Chapter 13 trustee will be assigned to oversee the case, receive your monthly payments, and make payments to your creditors. You will meet your trustee when you attend the meeting of creditors about a month after you file. At this meeting, the trustee reviews your forms and asks some routine questions. The meeting usually lasts about 5 minutes, unless it is a complicated case, or creditors attend and participate in the questioning (which is rare).

In some jurisdictions, you will also have to attend a confirmation hearing in front of the bankruptcy court judge. In others, your attorney will take care of the confirmation hearing, and the meeting of creditors is the only appearance you need to make. At the confirmation hearing, the bankruptcy judge will either confirms or deny confirmation of your plan. If there are no objections, the Judge will confirm your plan without a hearing in some districts.

If your plan is confirmed and you make all the payments called for under your plan, and complete the required “debtor education”, you will receive a discharge of any balances owed to your creditors.

Chapter 13 is a very powerful tool. These are the basics of how a Chapter 13 works. Be sure to discuss with your attorney all of the possibilities offered in a Chapter 13.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.
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