24by7Article.com | Chapter 13 Bankruptcy: How it works and what you need to know.

A chapter 13 case begins by submitting a petition with the bankruptcy court serving the area where the debtor has a dwelling or residence.

Unless the court orders otherwise, the debtor must also document with the court:

* schedules of assets and liabilities;
* a schedule of current income and expenditures;
* a schedule of executory contracts and unexpired leases; and
* a statement of financial affairs.

The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, procured 60 days before filing; a statement of monthly net income and any predicted increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.

The debtor has to produce the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns submitted during the case (including tax returns for prior years that had not been filed when the case began).

A husband and wife may perhaps file a joint petition or individual petitions.

The courts needs to charge a $ 235 case filing fee and a $ 46 miscellaneous administrative fee. Normally the fees must definitely be paid to the clerk of the court upon filing. With the court's permission, nonetheless, they may be remitted in installments.

The number of installments is restricted to four, and the debtor must make the final payment no later than 120 days after filing the petition.

If required, the court may draw out the time of any payment, as long as the last installment is paid no later than 180 days after filing the petition. Id. The debtor may also pay the $ 46 administrative cost in regular payments. If a joint petition is submitted, only one filing fee and one administrative fee are levied. Consumers should be aware that failure to remit these fees may result in dismissal of the case.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:

* A list of all creditors and the amounts and nature of their claims;
* The source, amount, and amount of the debtor's income;
* A list of all of the individuals property; and
* A detailed accounting of the debtor's monthly living expenses.

Married individuals have to gather this data for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is needed so that the court, the trustee and financial institutions can examine the household's financial position.

When a person files a chapter 13 petition, an unbiased trustee is identified to administer the case. In some districts, the U.S. trustee or bankruptcy administrator delegates a standing trustee to serve in all chapter 13 cases. The chapter 13 trustee both examines the case and serves as a disbursing officer, collecting payments from the consumer and making distributions to creditors.

Submitting the petition under chapter 13 "automatically stays" (quits) most collection actions against the borrower or the debtor's property. Filing the petition does not, however, stay certain types of actions listed under 11 U.S.C. ?? 362 (b), and the stay may be effective exclusively for a short time in some situations. The stay occurs by performance of law and involves no judicial action. As long as the stay is in effect, lenders generally may not trigger or continue lawsuits, wage garnishments, or still make telephone calls calling for payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are given by the debtor.

Chapter 13 additionally includes a very special automatic stay arrangement that shelters co-debtors. Unless the bankruptcy court gives authority otherwise, a creditor can't seek to collect a "consumer debt" from any individual who is bound along with the debtor. Consumer debts are those incurred by an individual primarily for a private, family, or household purpose.

Individuals may possibly use a chapter 13 case to save their home from home foreclosure. The automatic stay ends the foreclosure proceeding as soon as the individual submits the chapter 13 bankruptcy filing. The individual may then make the past-due payments current over a reasonable period of time. Still, the debtor may possibly still use up the home if the mortgage company finalizes the foreclosure sale under state law before the debtor files the petition. The debtor may also lose the home if he or she fails to make the ordinary mortgage payments that come due after the chapter 13 filing.

In between 21 and 50 days after the borrower files the chapter 13 petition, the chapter 13 trustee will certainly officiate a meeting of creditors. If the U.S. trustee or bankruptcy administrator arranges the meeting at a site that does not have routine U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the debtor files. During this meeting, the trustee installs the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan. If a husband and wife file a joint petition, they both must absolutely attend the creditors' meeting and respond to questions. In order to shield their separate judgment, bankruptcy judges are banned from appearing at the creditors' meeting. The participants commonly solve problems with the plan either during or soon after the creditors' meeting. Ordinarily, the debtor can stay away from problems by making sure that the petition and plan are thorough and accurate, and by consulting with the trustee before to the meeting.

In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, has 180 days from the date the case is filed file a proof of claim.

After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor's chapter 13 repayment plan.