24750 Lahser Rd
Southfield, MI 48033
248-352-8722
Contact Us:
Chapter 13
Introduction
The purpose of chapter 13 bankruptcy is to allow individuals with a regular income the opportunity to keep their property while their debts are adjusted into a manageable repayment plan. A repayment plan in chapter 13 is available to individuals, but not business entities. Under chapter 13, an individual usually pays back all or part of his or her debt over a period of three to five years; during this period, creditors may not start or continue collection efforts against the debtor. If an individual is not able to pay back his or her debts, he or she may be eligible to liquidate debts under chapter 7. It is important to consult an experienced bankruptcy attorney if you are considering bankruptcy to determine what chapter of the bankruptcy code is best for your situation.Chapter 13 Eligibility
To be eligible for chapter 13 bankruptcy, an individual’s total debt must be less than a predetermined amount that is adjusted periodically; a qualified bankruptcy attorney should have up-to-date information on what that amount is. An individual must also receive credit counseling from an approved credit counseling agency within 180 days. The law prohibits a debtor from filing a new case if the prior case was dismissed for bad faith.How Chapter 13 Works
A case for chapter 13 begins when an individual files a petition with the bankruptcy court where he or she lives. Along with this petition, an individual filing chapter 13 bankruptcy must also provide the court with schedules of assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases, a statement of financial affairs and a certificate of credit counseling and any repayment plan developed through credit counseling. A husband and wife may choose to file joint or individual bankruptcy petitions under chapter 13.When you file chapter 13 bankruptcy, most collection actions must stop; this is known as an “automatic stay.” The stay is in effect for the duration of your repayment plan and in most circumstances creditors may not pursue lawsuits, repossessions or wage garnishments during this time. If you have a home mortgage, the automatic stay will prevent creditors from foreclosing on your house while you work to make past-due payments current.
Once you file for chapter 13, a trustee will be appointed to your case. The trustee will work to evaluate your case and collect payments from you to pay your creditors. The first responsibility of the trustee is to hold a meeting of creditors within 20 to 50 days after you file for chapter 13. At this meeting, you will be required to take an oath before answering any questions your creditors may have for you. After this meeting, you will attend your confirmation hearing where your repayment plan will be scrutinized. If your plan is denied, you may file a modified plan or seek bankruptcy under chapter 7. Repayment plans generally put all of your disposable income toward repayment of your debts and you are required to begin your Chapter 13 plan payments to the trustee within 30 days of filing your petition for relief.
If you are considering bankruptcy, it is imperative that you seek legal counsel from an experienced bankruptcy attorney. A bankruptcy attorney should be familiar with the intricacies and nuances of current bankruptcy law and be able to help you propose a plan to get you on the road to a healthy financial future.