Successfully Navigating a Chapter 13 Bankruptcy
At the Law Office of Tracy A. Brown, we want our clients to succeed and start a new financially sound life after bankruptcy. However, Federal Bankruptcy Law lays out several requirements in order to complete the process. Completing a Chapter 13 Bankruptcy can be simple if you understand the basics and the few requirements. Here's a short guide to better understand what it is like filing a Chapter 13 Bankruptcy:
Chapter 13 Basics
First, you should understand that a Chapter 13 Bankruptcy is a plan to repay some or all of your creditors. The plan can range from 3-5 years. Most times, the amounts paid back to creditors are less than the full amount owed, if they receive anything at all. The paperwork, petition, and schedules are similar, if not identical, to the forms that a Chapter 7 individual would file with the court. However, the Chapter 13 bankruptcy includes a detailed plan indicated how creditors should be paid over the course of the bankruptcy. The amount paid to creditors in a Chapter 13 bankruptcy is based upon what you can actually afford, not necessarily how much you owe.
Like a Chapter 7, Chapter 13 Bankruptcies stop garnishments and foreclosures. Filing a Chapter 13 Bankruptcy has many benefits over a Chapter 7 Bankruptcy because it can discharge more types of debts than a Chapter 7, it can help pay off non-dischargeable debts on your terms, not your creditors' terms, it can help reduce interest rates on secured contracts, and it can freeze IRS interest and penalties. There are several other reasons a Chapter 13 Bankruptcy can be beneficial, but talk to your attorney to see if any can benefit you.
The First Steps
The process of filing a Chapter 13 involves having your attorney prepare your paperwork based on information you provide them. You will need to submit six months proof of income; two years of tax returns; a list of your assets, expenses, and debts; and answer a few questions about your financial affairs. Before filing, you will also have to take a credit counseling course. Your attorney will often require other information that will assist in the preparation of your case.
After your case is filed, you will have an ongoing requirement to make your monthly plan payment. Your employer can take this payment out of your paycheck automatically, but be sure the trustee gets any payments until the deduction starts (including partial payments). You can pay the Trustee directly by cashier's check or money order. The first full payment is due no later than 30 days after your Bankruptcy case is filed with the Court. If you filed bankruptcy in St. Louis, you can submit your payments online at http://www.ch13stl.com/epay/index.asp , but there is a small processing fee.
Failure to make your payment on time could result in the dismissal of your case. Upon dismissal, not only will creditors contact you again to collect, but you may owe any interest and penalties on debts that were reduced in your Chapter 13 Bankruptcy case.
If you take time off work or change jobs, you will need to make the payment directly to the Trustee until your employer begins the deducting again. Let your attorney know if any of these things happen so they can reevaluate your circumstances.
Meeting of Creditors
After your case is filed, the Court will send a notice giving you the date, time and location of your Meeting of Creditors. The meeting takes place about 30 days from the date of filing. You must attend this meeting and bring both your photo ID and Social Security Card (or a W-2 or Social Security Statement with your full number). Creditors are allowed to appear and ask questions, but its rare if one shows up. The meeting begins with an announcement. You will then be placed under oath and the Trustee will the paperwork you submitted to court, particularly paying attention to your living expenses and your income, and other factors which may affect the payment plan you have proposed. Your attorney will be there with you if you have any questions or concerns.
About 1 month after your Meeting of Creditors, the court will schedule your Confirmation Hearing. This is the court proceeding where the Judge approves your monthly Plan Payments & overall Plan. You generally do not have to attend this hearing. If the Trustee has a question or needs additional information in your case, it will come in the form of an “Objection”. Don’t be alarmed! This is the only process available for the Trustee to obtain additional information & answers. Your attorney will resolve these objections routinely in each case as they arise. If your assistance is required, they will contact you for additional information.
Once your Meeting of Creditors and Confirmation Hearings are concluded, you still have several ongoing obligations.
You must send the Trustee copies of your federal and state tax returns each year as soon as they are filed. In St. Louis, the Trustee's address for mail is Chapter 13 Trustee, P.O. Box 430908, St. Louis, MO 63143. You must also provide the Trustee your tax refund. You cannot spend your tax refund until you receive correspondence from the Trustee stating the amount you must pay the Trustee. You may be allowed to keep a portion of the refund, but do not spend any of it until you hear otherwise.
Your attorney will continually review your case as Creditors receive notice and file documents with the Court. There is nothing for you to do unless you forgot a creditor or a creditor continues to contact you after you have notified them of your bankruptcy. If this happens, contact your attorney.
That's a Chapter 13 in a nutshell. Consulting with an experienced Bankruptcy attorney will make sure that you pay the proper amounts and handle any issues accordingly.
Since 1997, the St. Louis attorneys at The Law Office of Tracy A. Brown, P.C., have helped thousands in Saint Louis stop creditors from harassing, garnishing, and threatening clients through Chapter 7 and Chapter 13 bankruptcy filings that alleviate excessive debt. Contact us today to free your future from your past.