Chapter 13 Rules

The chapter 13 rules of bankruptcy are fairly complex, while the primary concepts are quite simple. A chapter 13 bankruptcy is when the debtor is put under what is called a “wage earner’s plan”, and under this plan the debtor must payback some their debts to creditors for a time period from three to five years after the payment schedule is set. The chapter 13 bankruptcy is heavily contingent on the person’s income. If the individual’s income is lower than the state median he or she will have to have to repay some debts for three years, if a person has an income above the state median, that person will have to repay for five years. With a chapter 13 bankruptcy, a person will never have to repay their previous debts for longer than five years as stated within the appropriate federal statutes.

The chapter 13 rules and regulations are complex, and diving into the depths of these provisions is beyond the scope of this article. The general ideas and concepts however are fairly simple and straightforward, and they begin by stating who can qualify for a chapter 13 bankruptcy. The chapter 13 rules clearly state that a person, even if the owner of an unincorporated business, or self-employed, can qualify for chapter 13 relief, as long as that person’s secured debts are below 1,010,650 dollars, and their unsecured debts are below 336,900 dollars. Be aware that these amounts are modified periodically so that they take into account the changes in the consumer price index. Entities that are considered to be corporations, or partnerships may not qualify for chapter 13 relief.

Persons who have previously had a bankruptcy petition dismissed up to 180 days before their chapter 13 filing will not be able to qualify for a chapter 13 proceeding if the petition was dismissed due to a number of reasons. These reasons include if a person did not comply with particular orders of the court, or if they failed to appear at certain court dates. If the bankruptcy petition was voluntarily released due to creditors seeking relief from the courts so that they could recover property they had liens on the particular individual will also not be eligible for chapter 13 relief. A person seeking chapter 13 relief must also attend credit counseling from an approved credit counseling agency to become eligible. A person may become exempt from attending such credit counseling if they are involved in certain emergency situations, or if their bankruptcy administrator has concluded that there weren’t enough qualified counseling agencies available to provide the required counseling. If the person established a debt management plan during the counseling sessions, it must filed with the appropriate courts.

The chapter 13 process starts with a petition filing at the bankruptcy court that is currently serving the area where the debtor has a place of residence. A debtor must also file a variety of other documents with the court, and these include their assets and liabilities, their current income and expenditures, and a general statement that describes their financial affairs. Other documents that will be required at the time of filing the petition include; tax returns, a copy of any debt repayment plan established during the initial credit counseling session, and any documents that support the debtors employment during the most recent years.

The debtor filing the petition will be provided a chapter 13 case trustee who will handle the submission of all pertinent documents, as well as any payments that must be paid over time. Be aware that most chapter 13 filings require a 235 dollar case filing fee as well as a 39 dollar fee that is considered to be a miscellaneous administrative fee. Installments can sometimes be made for these fees, and typically the person is given four installments to make over 120 days.

After the debtor has paid all the necessary fees, and has filed all of the necessary documents, most creditors and other collection agencies will not be able to continue any kind of collection actions. A meeting will then be scheduled for all of the debtor’s creditors, the chapter 13 trustee, and the parties filing the chapter 13 bankruptcy. After this meeting, the debtor must file a repayment plan for court approval and then upon approval, must provide regular payments to their chapter 13 trustee, which are typically on a biweekly, or monthly basis. The court then must hold a confirmation hearing to approve the repayment plan. If the plan is in fact approved, the chapter 13 trustee will distribute any monies to the appropriate creditors under a specific schedule. Once the debtor has made all of their scheduled payments under their approved repayment plan, and has satisfied all other obligations set during the appropriate bankruptcy hearings, that debtor should be discharged of all their debt either three, or five years from the initial scheduling of payments.

The chapter 13 rules of bankruptcy go into much more detail than this, but the major timeline and results typically follow this general process. Don’t just perform your own research and file for bankruptcy without consulting an attorney who specializes in bankruptcy law. Chapter 13 bankruptcy can work for you, and is something that can a provide tremendous amount relief from debtors provided you follow the correct steps.