Anyone with a regular stream of income who is weighed down with debt, but hopeful they could repay some or most of those debts if given enough time, can file for bankruptcy under Chapter 13. A Chapter 13, also called a wage earner's plan, allows the debtor to propose a plan wherein he/she/they agree to pay a monthly payment to the Bankruptcy Trustee over three to five years. Filing a Chapter 13 and proposing a plan allows the Debtor to be placed under the protection of the Court while settling his/her/their liabilities.

CHAPTER 13 REQUIREMENTS

A person seeking to file a Chapter 13 bankruptcy must first meet with a knowledgeable Attorney for a consultation to determine if filing Bankruptcy is the right choice. Once the right attorney is retained, a mandatory pre-filing credit counseling course will need to be taken and documents provided. The pre-filing credit counseling course is available through multiple companies online but Freedom Law Firm provides the information needed to take the course and an Attorney code so there is no up front cost to the Debtor.  

Once the credit counseling requirement has been satisfied, the debtor will now be directed to collect and submit certain documents. These documents will allow our office to properly prepare your petition, schedules and plan and identify any potential issues prior to filing your case. 

Below is a typical list of documents that must be submitted when filing for Chapter 13 bankruptcy:

•      Voluntary petition (supplemented with the following schedules and exhibits)
  
  • Schedule A/B: Property (this will list any homes, cars, trucks, boats, bank accounts, stock accounts, firearms, clothing, household goods, etc. that you may have)
    
  • Schedule C: Property you Claim as Exempt (Nevada has fantastic exemptions that will afford protection on the equity of most assets)
    
  • Schedule D: Creditors who have Claims Secured by Property (This is where we list mortgage and auto loans and any other secured claims such as furniture).
  • Schedule E/F: Creditors who have Unsecured Claims (This is where all credit cards, personal loans, medical debt, IRS, pay day loans and more are listed).
  • Schedule G: Executory Contracts and Unexpired Leases (Any lease or contract)
    
  • Schedule H: Your Co-Debtors 
    
  • Schedule I: Your Income 
    
  • Schedule J: Your Expenses
    
  • Form 107: Statement of Financial Affairs (A series of questions regarding your financial situation)
    
  • Form 122C: Current Monthly Income (An average of your income in the 6 months leading up to filing)
    
  • Chapter 13 Plan: The bankruptcy plan proposed to the court, creditors and Trustee outlining repayment of secured and/or unsecured debt during the course of your case.
    
  • Form 2030: Compensation Statement of Attorney for the Debtor (where we disclose our fees based on the retainer)
    
  
  

• In addition, other schedules that provide a general overview of the debtor’s assets, property, and debts are also required to be submitted at the time of the filing of the petition or within 14 days thereafter.

• When the Chapter 13 petition and all needed attachments are filed, the Court will appoint a trustee who is in charge of overseeing the proceedings and disbursing all payments from the debtor to the creditor(s). The trustee must maintain impartiality in the handling of the case.

• CHAPTER 13 BANKRUPTCY PLAN

• Suffice to say that the documents enumerated above are imperative to the process, however, one of  the most important aspects of a Chapter 13 case that can make or break it, is the Chapter 13 bankruptcy plan.

• The bankruptcy or repayment plan is submitted with the bankruptcy petition at the time of filing. Said plan details the regular payments by the debtor which are disbursed to the creditors by the Trustee, until the obligations are paid (over the course of three to five years). However, not all creditors are given the same level of prioritization with respect to their claims. A creditor may be tagged as having one of three types of claims, namely: priority, secured, or unsecured.
  

• • Secured claims – Debts falling within the purview of this type are “secured” by collateral. These include home mortgages, auto loans, some types of IRS debt, furniture, etc. Debtors can typically keep their property secured by a claim, even if delinquent at time of filing. The on-going monthly payments for that claim and the past due payments must be addressed in the plan. Debtors can also choose to surrender secured assets through the Bankruptcy plan.  
    
  • Priority claims – These debts are usually provided for in the plan and cannot be discharged. Common examples of this type of claim are taxes, alimony, and child support. Though these debts may not be discharged, they can be reorganized and be settled over a stipulated period.
    
  • Unsecured claims – Claims of this type do not necessitate complete repayment before they can be discharged. The proposed plan must require that the debtor pay all of his/her/their disposable earnings over the life of the plan and the creditor must receive at least the same amount as he/she/they would have if the properties of the debtor were liquidated under Chapter 7.
    

  Before the bankruptcy plan is approved, the Trustee will hold a meeting of the creditors, during which, the debtor is sworn under oath and the creditors and the Trustee may ask questions regarding the debtor’s income and details of his/her/their financial situation. Usually, 45 days or so after the 341 Meeting, the Court will conduct a hearing to decide whether the repayment plan meets the confirmation standards and is actually feasible. The corresponding creditors are also invited to the hearing and may object to the proposed plan if they notice any issues with any of its provisions. The Trustee will typically file an opposition to most Chapter 13 plans as well.
  

• FULFILLING THE BANKRUPTCY PLAN

• The repayment plan developed according to Chapter 13 may extend over three to five years. Once the plan is given the go-ahead by the Court, the debtor and his/her/their creditors are bound to its provisions. Thus, the debtor is mandated to make payments until the plan is fulfilled and the debtor is protected by the Court, barring the creditors from pursuing further actions for collection of payments. Should the debtor default in the payments, the case may be dismissed or be converted to a Chapter 7 bankruptcy.

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FREEDOM LAW FIRM IS HERE TO HELP.

Bankruptcy is often the last but necessary resort. It is a delicate and complex proceeding, and you want someone with plenty of experience to consult you and guide you through the process.