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CHAPTER 13 BANKRUPTCY

DEFINING CHAPTER 13

Chapter 13 is one of two kinds of consumer bankruptcy, the other being Chapter 7. Unlike Chapter 7, there is no automatic discharge within months of filing. Chapter 13 involves the debtor committing to a debt repayment plan. The entire process takes anywhere from three (3) to five (5) years to complete. Chapter 13 involves restructuring certain debts, by modifying the terms and amount of those debts.

QUALIFYING FOR CHAPTER 13

Chapter 13 is often referred to as the wage earner's bankruptcy. Often times, debtors who fail the Chapter 7 means test, will often times qualify for Chapter 13. To qualify for Chapter 13 the debtor must show that they have income to pay off most of their debts during the bankruptcy. The debtors total unsecured debts must be less than $360,475 and the total secured debts must also be less than $1,081,400.

CHAPTER 13 PROCESS

Once it is determined the debtor qualifies for Chapter 13, their Attorney prepares a Chapter 13 Petition which includes statements and schedules. These statements and schedules contain information on the debtors income, expenses, assets, and debts. In addition, the debtors Attorney prepares a Chapter 13 plan. The Chapter 13 plan must propose to pay off most of the debtors for the duration of the bankruptcy. The plan must take into account the debtors disposable income remaining after all necessary expenses are paid. The plan may can modify the terms of mortgages and car loans. The debtor can also make a motion to the court to have certain debts reduced based on the value of the property it secures. The debtors primary mortgage and any arrearages are paid directly to the Bankruptcy Trustee, this is called a Plan Payment. The trustee collects an administrative fee for collecting this payment and distributing it to the creditors. All other debts are paid according to the plan directly by the debtor for the remainder of the bankruptcy. The Bankruptcy Trustee must review and approve the plan before it can be confirmed. Similar to a Chapter 7, the debtor must attend a 341 Meeting where there the debtor affirms they have read and approved the bankruptcy petition and plan.

YOUR ASSETS IN CHAPTER 13

This is where Chapter 7 and Chapter 13 differ. The trustee is not concerned with non-exempt property in a Chapter 13 case. Unlike a Chapter 7, the debtors assets are not sold or liquidated to pay of creditors in a Chapter 13 Bankruptcy. The debtor in a Chapter 13 is making a commitment to pay these debts off during the duration of the bankruptcy, which will last anywhere from three to five years.

FINDING THE RIGHT CHAPTER 13 ATTORNEY

Chapter 13 is extremely complicated so you need to make sure you hire an Attorney who has experience filing Chapter 13 Bankruptcies. It involves a lot more steps and is much more extensive process. A paralegal or legal site can possibly prepare your petition, but they will not be able to attend the 341 meeting or assist you with the modifications to the plan or motions. Chapter 13 Plans are specific to not only the state in which you file, but also the district. The Bankruptcy Trustee often times will request the plan be modified several times, before it is approved. Filing Chapter 13 is not a simple process and requires the requisite amount of expertise and knowledge of bankruptcy laws and procedures in your region. Maxwell Law Firm, PLLC assists debtors for filing for Chapter 13 in the Western and Middle Districts of North Carolina. Discounts are applied to the fees automatically when you scheduling your appointment online.

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