1. What is Chapter 13 bankruptcy?
Chapter 13 is a court protected repayment plan. It is mostly used by people who have a predictable fixed income. You need to pay regularly to the Chapter 13 trustee. The trustee will then pay out to the creditors with the money collected from the debtor in accordance with the Chapter 13 plan. The repayment plan is approved by the court after determining your income so that you can make payment under the plan.
2. What is a Chapter 13 discharge?
The debtor will lose liability of certain debts under bankruptcy discharge. Once the Chapter 13 plan is completed, a Chapter 13 discharge occurs.
3. What is Chapter 13 bankruptcy plan?
A Chapter 13 bankruptcy plan is a written plan, which is also known as the wage earner’s plan. It is a written plan stating the amount of money the debtor will pay to the Chapter 13 bankruptcy trustee. It’s worked out by the debtor wherein the duration of the plan, the amount to be paid to each creditor and other important details are also stated.
4. What is the role of a trustee in Chapter 13?
A Chapter 13 trustee is appointed by the United States Trustee for a person who files bankruptcy. The work of a trustee is to collect payment from the debtor and make payments to the creditors. It is also the duty of the trustee, to make sure that the plan is followed and to look after the case until it is closed.
5. Are all debts paid in full in Chapter 13?
The debts are generally not paid in full, although some priority debts are required to be paid in full. The repayment amount depends upon your secured debt amount and monthly income. Many times, the debtor needs to pay hardly 50 percent of the total debt, for unsecured debts, which is spread through 36-60 months.
6. How long does Chapter 13 bankruptcy take?
Chapter 13 bankruptcy is designed for the working class Americans, wherein they can repay their debts in monthly instalment over a period of 3-5 years. However, the time also depends on the amount to be paid and the debtor.
7. What is the eligibility for filing Chapter 13 bankruptcy?
Following are the eligibility criteria required to file Chapter 13 bankruptcy:
a. You must reside in, own a property or have business in the United States.
b. You must be doing a fixed job with a regular income.
c. You shouldn’t have dismissed another bankruptcy case within the last 180 days.
d. You must have been briefed by an approved credit counseling agency before filing for bankruptcy.
8. Can I lose my property if I file for Chapter 13 bankruptcy?
Generally, in Chapter 13 case, you will not lose any of your property. However, if you own a valuable non-exempt property and don’t have enough means to satisfy the court, then your property can be liquidated to pay the creditors.
9. Do I need to visit a court if I file for Chapter 13 bankruptcy?
It is very important to attend the meeting of the creditors held in the court. It isn’t actually a court appearance in front of a judge. The Chapter 13 trustee heads the meeting of the creditor, wherein the debtor will be asked few questions by him/ her. Creditors can also attend the meeting and have the right to ask questions if they want. This meeting is generally held in a month after the case is filed. Again, a confirmation hearing is held after a month of the meeting of the creditors. The judge is present at the meeting and only your attorney can go and attend the hearing.
10. Will I get protection from creditors after filing bankruptcy?
According to the federal law, after filing for Chapter 13, an automatic stay comes into action. This automatic stay restrains the creditors to stop all actions against the debtors like lawsuits, foreclosures, wage garnishments, etc.
11. How will my credit ratings get affected after filing Chapter 13 bankruptcy?
According to FICO, filing Chapter 13 bankruptcy obviously makes a negative impact on your credit score. Compared to Chapter 7 bankruptcy, a potential creditor might favor Chapter 13 bankruptcy case, wherein you will seem more responsible by repaying the debt over a period of 3-5 years.
12. Will everybody know if I file for Chapter 13 bankruptcy?
Filing Chapter 13 bankruptcy is a public record and whoever checks your credit report will know about it. It is not usually published in newspaper. However, the only people who are going to know about your filing are your attorney, creditors and the people whom you inform.
13. What will happen if I fail to make Chapter 13 payments?
If you are not able to repay your debts according to the Chapter 13 plan due to injury, loss of job, or any other reason, the plan can be modified according to your situation. However, if you are unable to make the required payments at all, the case can be converted to Chapter 7 or even be dismissed.
14. What does the bankruptcy attorney do in Chapter 13 case?
The bankruptcy attorney plays a very important role in Chapter 13 bankruptcy. The attorney analyzes the financial situation of the debtor and determines whether Chapter 13 is perfect for the debtor. Few other roles of the attorney are:
a. To help in the required credit counselling session before filing for bankruptcy
b. To guide the debtor in preparing a budget
c. To come up with a Chapter 13 plan
d. To fill out all forms and legal papers under Chapter 13
e. To attend the creditor’s meetings and the hearing thereafter
f. To obtain discharge at the completion of the plan