Getting Your Finances Back in Order:  Chapter 13 Bankruptcy in 6 Steps over 3 -5 Years

If you have a regular income but are having trouble repaying your debts, Chapter 13 bankruptcy could help you get your financial affairs back in order.  Being aware of the steps in the bankruptcy process and consulting with a bankruptcy attorney can help you decide if Chapter 13 is a good option for you.

1.  Decide if Chapter 13 is right for you.

If you have a steady income, Chapter 13 could provide a way for you to keep your property and adjust your debts so you can pay them off over time (typically, three to five years.).  Under Chapter 13, you can save your home from foreclosure, reschedule and extend debts other than a home mortgage, protect co-debtors, and avoid having to deal personally with creditors.  Consulting with a good bankruptcy attorney on your options and then getting briefed from a certified credit counseling agency on financial management (within 6 months prior to filing for bankruptcy) is a good first step on the road to financial stability.

2. File Your Bankruptcy Petition and Official Bankruptcy Forms with the Court.

If  you and your bankruptcy attorney decide Chapter 13 is a good option for you, he will file a petition with the bankruptcy court in your area.  Within 15 days of filing (but usually concurrent with filing), he will also submit forms stating your assets, liabilities, expenses, income, a statement of your affairs, and your debt repayment plan (typically developed during credit counseling).

Once your petition is filed, the court will enter an order that prohibits most of your creditors from taking or continuing any collection or legal action against you. The court appoints a trustee for your case and sends a Notice of Commencement of Case to you and all of the creditors listed in your petition that gives the date set for the Meeting of Your Creditors.

Step 3 – Begin making payments – approximately 30 days after filing.

Approximately 30 days after your Chapter 13 petition has been filed with the court, you have to make your first payment, as stipulated by your repayment plan.  This and subsequent payments are submitted directly to the court appointed bankruptcy trustee for your case.

Step 4 – Meeting of Your Creditors – approximately 45 days (6 weeks) after filing.

The court holds a Meeting of Your Creditors within approximately six weeks of your filing for bankruptcy.  Your creditors are asked to attend the meeting, but usually they do not come. You, on the other hand, are required to attend the meeting and testify under oath that all the information in your bankruptcy petition documents is accurate.  The court-appointed trustee presides over the meeting, which is typically informal and brief.

Step 5– Confirmation Hearing – within 45 days of the Meeting of Creditors (90 days or 3 months after filing).

Within 45 days of the Meeting of Creditors, the court holds a confirmation hearing.  During the hearing, the bankruptcy trustee recommends whether or not your repayment plan should be approved. Creditors can object to this confirmation, but your attorney will most likely have avoided this by addressing all issues before the hearing.

Step 6– Formal Discharge – 3 – 5 years from your first repayment.

You will be entitled to a formal discharge releasing you from all debts listed in your repayment plan after all payments have been made (over a maximum of 5 years) and after you have completed an approved financial management course.  Long term debt, such as home mortgages, debts for alimony or child support, debt due to certain taxes, debts for most government funded or guaranteed educational loans, and debts related to criminal convictions will not be discharged under chapter 13.

The steps listed in this blog are very general and may not apply to every individual.  Consulting with a bankruptcy attorney in your home state to determine your best course of action is highly recommended.  If you live in New York, contact The  Law Offices of William Waldner at 212-244-2882 or fill in the online contact form to schedule a free consultation and get started on the road to financial well-being.

This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.