One of the most common questions a bankruptcy attorney hears is “What is Chapter 13 bankruptcy?” The short answer is that a Chapter 13 bankruptcy allows a debtor to restructure his debts and pay them over time, usually three to five years.
Who Can File A Chapter 13 Bankruptcy?
Any individual with regular income who resides, is domiciled, or has a place of business or property in the United States may file a Chapter 13 bankruptcy. Additionally, a debtor must have liquidated unsecured debts of less than $336,900 and secured debts of less than $1,015,650.
What Constitutes Regular Income?
The Bankruptcy Code defines regular income as income that is sufficiently stable and regular such that it will allow a Chapter 13 debtor to make the payments required pursuant to his Chapter 13 plan. Income can be from wages or salary, government benefits, alimony and support payments, retirement or pension income, or any other income received by a debtor on a regular basis.
How Does a Chapter 13 Case Work?
To initiate a Chapter 13 bankruptcy, a debtor must file a bankruptcy petition and the bankruptcy schedules with the bankruptcy court. A debtor must also file paystubs or payment advices for the preceding 60 day period. Additionally, a Chapter 13 debtor must provide the bankruptcy trustee with a copy of his tax return for the most recent tax year.
A Chapter 13 debtor must formulate and file with the bankruptcy court a Chapter 13 plan which specifies his proposal for repaying his debts. Moreover, the Chapter 13 plan must allocate 100% of the debtor’s monthly net disposable income for payment to his creditors.
What is the Meeting of Creditors?
The meeting of creditors is a hearing conducted by the bankruptcy trustee during which the debtor testifies under oath regarding the contents of his petition and schedules and his financial situation. The debtor’s attendance at the meeting of creditors is mandatory.
What is the Confirmation Hearing?
If the bankruptcy trustee has any objections to confirmation, the debtor will be notified of those objections at the Meeting of Creditors and in writing. The debtor has until the confirmation hearing to cure the objections. If the debtor cures them, the trustee will recommend confirmation. If the debtor does not cure the objections to confirmation before the confirmation hearing, the court will hold a hearing during which the debtor and trustee will make their respective cases for why the debtor’s Chapter 13 plan should or should not be confirmed.
If a debtor successfully completes his Chapter 13 plan, he will receive a discharge. If he fails to complete the plan, his case will be dismissed without discharge.
Getting Legal Help
Chapter 13 bankruptcy is far too complex to be fully examined here. Therefore, if you have questions about Chapter 13 bankruptcy, you should contact an experienced bankruptcy attorney in your area.
