Bankruptcy is one of the most common debt-relief options that can help you wipe out your debts and restructure your finances. Several types of bankruptcy can help you solve your financial problems and pursue debt settlement. One of the most common bankruptcy types is the Chapter 13 bankruptcy. It is also known as the “reorganization bankruptcy” or the “wage earners bankruptcy”. 

Before you file for Chapter 13 bankruptcy, it is advisable to consult a credible Wheeling bankruptcy attorney to help you assess your financial situation and determine whether this chapter is the best option for you to have a fresh start and aim for a debt-free life. It is important to know how Chapter 13 bankruptcy works. This article will give you an overview of Chapter 13 bankruptcy by answering the following questions:

  1. What is a Chapter 13 Bankruptcy?
  2. How Do I Qualify For Chapter 13 Bankruptcy?
  3. How Do I File for Chapter 13 Bankruptcy?
  4. How Does Chapter 13 Bankruptcy Work?
  5. What is the Role of a Chapter 13 Trustee?

What is a Chapter 13 Bankruptcy?

Wheeling bankruptcy attorneyThis bankruptcy chapter involves the reorganization of your finances under the supervision and approval of the bankruptcy court. It allows you to catch up on missed car loan payments or mortgage and reorganize your debts following the terms of the court-approved debt repayment plan. This often lasts between three and five years. This chapter requires you to have a stable income to keep current on loans and repay debts while protecting your assets from liquidation. Even though it’s a common bankruptcy type, only debtors with sufficient income can file this chapter to be able to proceed with the repayment plan. 

How Do I Qualify For Chapter 13 Bankruptcy?

To qualify for Chapter 13 bankruptcy, you must meet the following criteria:

  • You must have a regular and sufficient monthly income to pay off your debts.
  • You have fulfilled the credit counseling requirement.
  • You have filed your income tax returns.
  • Your proposed plan repays all required debts.
  • You can repay a certain amount to unsecured creditors.
  • You must not have filed for Chapter 13 bankruptcy in the past two years or Chapter 7 bankruptcy in the past four years.
  • You have no previous bankruptcy case (Chapter 7 or 13) that was not dismissed within the last 180 days.

How Do I File for Chapter 13 Bankruptcy?

A competent Wheeling bankruptcy attorney can help you find out whether you qualify for Chapter 13 bankruptcy. Here are the steps in filing bankruptcy Chapter 13:

1. Take credit counseling sessions – It is mandatory to take credit counseling sessions from a credit counseling agency before the bankruptcy filing. 

2. Fill out bankruptcy paperwork – You need to accomplish the form with the complete details of your financial status. You need to declare all your assets, liabilities, monthly income, living expenses, bank account information, credit card debt, loan debt, and property transactions.

3. File bankruptcy petition – Your bankruptcy case starts when you file the petition and appoint a bankruptcy trustee. Once you have filed for bankruptcy, you enter an “automatic stay”. This is a provision in United States bankruptcy law that temporarily prevents creditors or collections agencies from pursuing debtors for amounts owed.

4. Submit payment plan – You must submit a proposed payment plan within fourteen days from the filing date of the bankruptcy petition.

5. Attend the creditors’ meeting – This is held outside of the presence of the judge and, depending upon the case chapter, usually occurs between 21 up to 50 days after the filing of the petition. At the meeting, the bankruptcy trustee checks the debtor’s identification and asks a series of questions about the bankruptcy paperwork.

6. Attend the confirmation hearing – The debtor, creditors, and bankruptcy trustee can meet in court to settle and confirm the terms of the payment plan no later than 45 days after the creditors’ meeting.

7. Follow the payment plan – Creditors are paid according to the repayment plan for over three to five years.

8. Take a debt management course – You are required to complete a debt management course from authorized credit counseling agencies after the bankruptcy filing.

How Does Chapter 13 Bankruptcy Work?

In Chapter 13 bankruptcy, you need a court-approved repayment plan that explains how you’ll pay your priority and secured debts by making fixed payments on time to the bankruptcy trustee. The amount of the plan payment is based on a calculation of your disposable income. Under Chapter 13, you are given three to five years to resolve your debts while allocating all your disposable income to debt reduction. This option allows debtors to eliminate unsecured debts while catching up on missed mortgage payments.

As long as you complete the court-approved repayment plan, you can keep your property, avoid possession, and avoid foreclosure. In Chapter 13 bankruptcy, it is advisable to consult a reliable Wheeling bankruptcy attorney to help you prove your eligibility for a debt reorganization to a bankruptcy trustee. 

What is the Role of a Chapter 13 Trustee?

When you file for Chapter 13 bankruptcy, the court will appoint a bankruptcy trustee for your case to oversee the implementation of the repayment plan. You have to start making payments to the trustee within 30 days, even if the court has not yet approved the plan. In general, your trustee is expected to perform the following duties:

  • review your bankruptcy paperwork
  • assess the proposed plan and ensure its compliance with bankruptcy laws
  • collect plan payments from debtors and distribute funds to creditors
  • carry out the terms of the Chapter 13 plan

The Role of a Bankruptcy Lawyer

Filing bankruptcy Chapter 13 can be your last resort to help you pay off your debts, restructure your finances, save your property, and live a debt-free life. During the bankruptcy filing, the appointed trustee plays an important role in the success of the bankruptcy petition. It is crucial to know how a trustee can affect your filing. The decision to file for bankruptcy is made best with the legal help from our experienced Wheeling bankruptcy attorneys at Thomas E. McIntire and Associates. Our bankruptcy law firm in Wheeling will guide you throughout the Chapter 13 bankruptcy process and help you achieve debt settlement and financial freedom.