Chapter 13 Process

1. Prior to the bankruptcy filing, the new bankruptcy law provides that an individual debtor must complete a credit counseling session with an approved credit counselor. Read more about the New Bankruptcy Law…

2. Debtor must sign a written retainer agreement and retain a lawyer prior to the bankruptcy with the fee paid prior to the filing of the bankruptcy.  

3. Client must review and sign the bankruptcy petition forms for Chapter 13.

4. Attorney files the Chapter 13 and the court date stamps all forms and issues a case number. The automatic stay of Bankruptcy prevents creditors from continuing to collect their debts. Read more about Emergency Bankruptcy filings….

5. The court assigns a Chapter 13 Trustee to the case,  schedules a Meeting of Creditors for debtor and creditors, and serves written notice of the bankruptcy filing, Meeting of Creditors, and a Proof of Claim form on all of the creditors.

The Meeting of Creditors is generally held within 30 to 60 days of the filing date. The notice provides a date 90 days after the date set for the Meeting of Creditors within which creditors must file a Proof of Claim form in order to be paid by the Chapter 13 Trustee for the debt owed. A governmental unit such as the IRS has 180 days from the date the case is filed to file a Proof of Claim.

Although the debtor’s bankruptcy schedules will indicate an amount owing to each creditor, the creditor is responsible for filing and will be paid according to its Proof of Claim form.

6. Debtor will tender his or her first payment due under debtor’s Chapter 13 Plan within the first 30 days after the Chapter 13 Plan is filed with the court.

7. At least seven days prior to the Meeting of Creditors, the debtor must provide copies of his or her current year’s tax return and payroll stubs (received within six months prior to the filing of the Chapter 13 petition) to the Chapter 13 trustee.

8. The debtor attends the Meeting of Creditors, which is presided over by the Chapter 13 trustee. After asking questions of the client’s assets, income, payments to creditors prior to bankruptcy, if any, and generally confirming the veracity of the paperwork, the trustee allows other creditors who attend to ask questions as well.  At the hearing the trustee will indicate if the trustee recommends that the plan be approved or “confirmed” by the court.

9. The court holds a  hearing to confirm debtor’s Chapter 13 Plan.  If the Chapter 13 Plan is in proper form and neither the Chapter 13 trustee nor any creditor objects to it, the Chapter 13 Plan is confirmed by the court in a special hearing. Debtor’s attorney will attend such a hearing but usually not the debtor.

10. For the next three to five years called for under the Chapter 13 Plan, Debtor will continue to make monthly Chapter 13 plan payments.

11. During the next three to five years, the debtor must complete the Financial Management Course requirement by attending a financial management course offered by an approved provider.

12. Once the debtor completes all payments required under the Chapter 13 Plan and the Financial Management Course, the debtor petitions for and the court grants debtor’s Chapter 13 Discharge. The bankruptcy case is then closed.

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