Chapter 13 Bankruptcy
About Chapter 13
What debts are included in a Chapter 13 plan?
What if I want to surrender a car, home, or leased property?
Do I have to go to court?
How much will I have to pay each month?
How much does it cost to file Chapter 13?
When do I start making the monthly payments?
Who is the Chapter 13 Trustee?
Do I lose my refund while I'm in a Chapter 13 plan?
Does this affect my credit record?
How long will I be in Chapter 13?
Will I owe any debts after I complete the Chapter 13 plan?
Why choose Chapter 13 instead of Chapter 7?
Are there currently law changes that affect my rights?
ABOUT CHAPTER 13
Unlike Chapter 7 straight bankruptcy, Chapter 13 is a repayment plan. Think of it like a
consolidation loan for all your debts. You make a monthly payment for 36 to 60 months through
a Trustee that is appointed by the Bankruptcy Court. The Trustee takes your payments and pays
the debts that are listed in the Chapter 13 plan. Upon completion of the plan, you get a Discharge
from the Court which says you have completed the plan and you no longer owe any of your
dischargeable debts. Some debts are non-dischargeable in the bankruptcy and you will still have
to pay those debts after completion of the plan.
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WHAT DEBTS ARE INCLUDED IN A CHAPTER 13 PLAN?
All of your debts should be included. If you are current in your home mortgage
payments, you can continue to pay the mortgage yourself outside of your Chapter 13 Plan. If you
are in arrears in your mortgage payments, you are required to make all current mortgage
payments and arrearage payments through the Chapter 13 Plan.
In addition, car loans, car leases, household goods loans and leases, taxes, student loans,
credit card debt, medical bills, checking account overdrafts, payday loans, cash advance loans
and all other debts are required to be included in your Chapter 13 Plan.
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WHAT IF I WANT TO SURRENDER A CAR, HOME, OR LEASED
PROPERTY?
In a Chapter 13 Plan, you can surrender property that is pledged as collateral to a creditor.
Many options and choices can be made when a Chapter 13 Plan is prepared. We help you make
the choices by meeting with you and discussing the facts of your case and how the law applies to
your case. Each case requires professional evaluation and review. We don't tell you what you
can and can't do. Rather we tell you how best to accomplish your chosen goals.
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DO I HAVE TO GO TO COURT?
Yes. You are required to attend a hearing before the Chapter 13 Trustee. Rarely is an
appearance before the Bankruptcy Court Judge necessary or required. If you follow legal advice,
your Chapter 13 hearing should be very fast and easy. You must have a picture ID with your
social security number for your hearing. You must also bring the following documents to your
hearing: tax returns for the last two years, your car titles, pay stubs, retirement account
statements and bank statement for the month in which your bankruptcy is filed. Other documents
may also be required by the Trustee.
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HOW MUCH WILL I HAVE TO PAY EACH MONTH?
The monthly payment is different for each case depending upon income, living expenses
and the debts and assets involved. We provide a free consultation to advise you and explain the
payment calculation. Payments are usually made by payroll deduction, but can be made by
automatic checking account withdrawal or by direct payment.
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HOW MUCH DOES IT COST TO FILE CHAPTER 13?
Currently Court costs are $274.00. This is required in order to file a case with the Court.
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WHEN DO I START MAKING THE MONTHLY PAYMENTS?
At your Court hearing you need to have your first monthly payment for the Chapter 13
Trustee. The first payment can be put in our law firm trust account and then we write a trust
account check payable to the Trustee for the Court hearing. If the first payment is not made at
Court, the Trustee can ask the Judge to dismiss the case for non-payment. It is therefore very
important to follow the instructions given to you by your attorney.
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WHO IS THE CHAPTER 13 TRUSTEE?
The Trustee is a local attorney who is appointed by the United States Trustee (an arm of
the United States Dept. of Justice) to administer your bankruptcy case. The Trustee has certain
powers to order your full and complete cooperation in your Chapter 13 case. Your monthly
Chapter 13 payment includes an administrative charge by the Chapter 13 Trustee. This will be
more fully explained by us as your attorney.
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DO I LOSE MY REFUND WHILE I'M IN A CHAPTER 13 PLAN?
Sometimes the Trustee orders debtors to turn over the tax refunds for distribution to their
creditors. As your attorney, we can advise you how to best avoid this problem.
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DOES THIS AFFECT MY CREDIT RECORD?
Bankruptcy is allowed by law to be reported on your credit report for ten years from the
date you file your Chapter 13 case.
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HOW LONG WILL I BE IN CHAPTER 13?
Plans are designed by your attorney to meet your needs and comply with certain legal
requirements. Currently the maximum term of a Chapter 13 Plan is 60 months. The shortest
term is 36 months unless all bills are paid in full (100 percent) over a shorter term than 36
months.
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WILL I OWE ANY DEBTS AFTER I COMPLETE THE CHAPTER 13
PLAN?
If you have a long-term mortgage on your home (15 or 30 years, for example), you will
resume making your regular monthly mortgage payments after you finish paying the Chapter 13
Plan. Generally, upon completion of the Plan, all other debts will be discharged and you won't
owe them anymore.
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WHY CHOOSE CHAPTER 13 INSTEAD OF CHAPTER 7?
Each person's case is different in terms of debts, household income, property owned and
other facts that may affect their case. We offer a free consultation to analyze each person's case
and advise as to which Chapter (7 or 13) is best based upon the individual fact situation. If, for
example, you are behind on your home mortgage payment and want to keep your home, Chapter
13 will likely be the best choice to solve your debt problem. Chapter 13 can also protect your car
from being repossessed and can get your car returned to you in some cases, if it has already been
repossessed.
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ARE THERE CURRENTLY LAW CHANGES THAT AFFECT MY RIGHTS?
The law changed on October 17, 2005. There are many complex changes but bankruptcy is still available to solve debt problems.
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Call 937-275-7170 or TOLL FREE 1-800-789-7170 for a FREE
Consultation, or complete our online form.
This is intended to give you some information about Chapter 13 bankruptcy.
There is much more law that relates to bankruptcy and we have volumes of books
that deal with
bankruptcy. We also take continuing education courses in bankruptcy law to keep
up with new developments. As such, please ask us any other questions you may
have.
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