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You might be behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.
You need help repaying your debts now, but need to leave open the option of filing for Chapter 7 bankruptcy in the future. This would be the case if for some reason you can't stop incurring new debt.
You might be a family farmer who wants to pay off your debts, but you do not qualify for a Chapter 12 family farming bankruptcy because you have a large debt unrelated to farming.
If you have valuable nonexempt property, and you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt. However, if you have a lot of nonexempt property (which you'd have to give up if you file a Chapter 7 bankruptcy), Chapter 13 bankruptcy may be the better option.
If you received a Chapter 7 discharge within the previous six years, you cannot file for Chapter 7 again until the six years are up.
If you have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your creditor will go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.
You may have a tax debt. If a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you.
When you file a Chapter 13 bankruptcy, you are required to file a plan of repayment with the petition or within fifteen days thereafter, unless extended by the court for cause. The trustee must then approve the plan. The filing of a repayment plan has numerous rules and laws that must be followed exactly. For this reason, you should not attempt to submit a Chapter 13 without the assistance of competent legal assistance.
A meeting of creditors is held in every Chapter 13 bankruptcy case, during which the debtor is examined under oath. It is usually held 20 to 50 days after the petition is filed. You, as the debtor, must attend the meeting, at which creditors may appear and ask questions regarding the debtor's financial affairs and the proposed terms of the plan. If a husband and wife have filed a joint petition, both must usually attend the creditors' meeting. The trustee will also attend the meeting and question the debtor on the same matters. If there are problems with the plan, they are typically resolved during or shortly after the creditors' meeting. Generally, problems may be avoided if the petition and plan are complete and accurate and the trustee has been consulted prior to the meeting.
In a chapter 13 case, unsecured creditors who have claims against the debtor must file their claims with the court within 90 days after the first date set for the meeting of creditors.
After the Chapter 13 bankruptcy meeting of creditors is concluded, the bankruptcy judge usually determines at a confirmation hearing whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. While a variety of objections may be made, the most frequent ones are that payments offered under the plan are less than creditors would receive if the debtor's assets were liquidated or that the debtor's plan does not commit all of the debtor's projected disposable income for the three-year period of the plan.
Within thirty days after the filing of the Chapter 13 bankruptcy plan, even if the plan has not yet been approved by the court, the debtor must start making payments to the trustee. If the plan is confirmed by the bankruptcy judge, the chapter 13 trustee commences distribution of the funds received in accordance with the plan "as soon as practicable." If the plan is not confirmed, the debtor has a right to file a modified plan. The debtor also has a right to convert the case to a liquidation case under Chapter 7. If the plan or modified plan is not confirmed and the case is dismissed, the court may authorize the trustee to retain a specified amount for costs, but all other funds paid to the trustee are returned to the debtor.
The provisions of a confirmed Chapter 13 bankruptcy plan are binding on both you and each creditor. Once the court confirms the plan, it is your responsibility to make the plan succeed. You must make regular payments to the trustee, which will probably require adjustment to living on a fixed budget for a set time frame. In addition, your employer can withhold the amount of the payment from the your paycheck and transmit it to the chapter 13 trustee. Furthermore, while confirmation of the plan entitles you to retain property as long as payments are made, you may not incur any significant new credit obligations without consulting the trustee, as such credit obligations may have an impact upon the execution of the plan.
DISCLAIMER:
The information contained on the-mortgage-advisor.com web site is provided with the understanding that Anchor Mortgage & Investments, the parent company, does not offer legal, insolvency, tax, or other professional advice or services outside of the mortgage arena. As such, the information on this page should not be used as a substitute for consultation with professional insolvency, tax, legal or other competent advisers. While we have made every attempt to ensure that the information contained in this web site has been obtained from reliable sources, neither Anchor Mortgage & Investments nor the-mortgage-advisor.com is responsible for any errors or omissions, or for the results obtained from the use of this information.
For information on bankruptcy terminology, click here.
For information on Chapter 7 bankruptcy, click here
For more detailed information about chapter 13 bankruptcy from the American Bankruptcy Institute, click here.
