When filing for bankruptcy, Chapter 13 is one of two options available to individuals, the other being Chapter 7.
Both bankruptcy chapters offer financial relief and a fresh start to people in debt. While the end goal and much of the process is similar, the steps of filing for each chapter vary slightly.
While most individuals end up filing for Chapter 7 bankruptcy, Chapter 13 is a very good option in some situations. Here is everything you need to know about filing for bankruptcy Chapter 13.
The main advantage of Chapter 13 bankruptcy over Chapter 7 is that it does not involve the liquidation of assets. Under Chapter 7, many of your assets would be liquidated to pay off your creditors.
However, under Chapter 13, you (the debtor) get to maintain possession of all your assets. Instead of liquidation, Chapter 13 provides you with a restructured financial plan to pay off the majority of your debts.
The exact terms of a Chapter 13 filing will vary from case to case. The general time frame for repayment is 3-5 years.
At the end of this period, your debts are fully discharged. A Chapter 13 filing will stay on your credit report for seven years, however.
Filing for bankruptcy can be a complex process. To simplify that process for you, here is a step-by-step outline of the Chapter 13 filing procedures:
The first step in any bankruptcy filing is a credit consultation with a trusted bankruptcy attorney. During this consultation, your attorney will review your documentation and discuss your options with you.
After your consultation, your attorney will prepare your official bankruptcy documentation. This includes your bankruptcy petition and a schedule for filing. When filing for bankruptcy Chapter 13, your attorney will also begin to prepare your repayment plan (Plan of Reorganization) at this stage as well.
Next, your attorney will review all documentation and file your bankruptcy case. In extreme situations, you may file an emergency bankruptcy filing, which puts an immediate automatic stay in place. This is only for emergency situations such as imminent foreclosure on your home.
Once your bankruptcy has been filed, an appointed trustee will oversee the fulfillment of your case.
Within a month of your Chapter 13 bankruptcy filing, you must begin making payments according to your Plan of Reorganization. If your trustee does not receive payments on time, they may ask the bankruptcy judge to dismiss your case.
Roughly five weeks after your filing, the 341 Meeting of Creditors will take place. This is a mandatory meeting in which your trustee will review your petition and payment schedule with you. Barring unforeseen complications or questions from the trustee, this meeting only lasts about 5 minutes.
About two months (60 days) after the 341 meeting, your confirmation hearing will take place. Unlike the 341 meeting, your personal attendance is not mandatory at the confirmation hearing. Your attorney will be present to represent you at this hearing instead.
The confirmation hearing allows the bankruptcy judge to review your Plan of Reorganization with your creditors and attorney.
Often this hearing will be postponed 90 days to allow your creditors time to file their Proof of Claim in your case. You also may object to any of these claims if they are false or erroneous.
After the judge confirms your case, your Plan of Reorganization becomes the law of the case. At this point, your trustee may begin distributing your payments to your creditors. In most cases, the confirmation hearing marks the final “event” of your case. After this, all there is left to do is for you to continue making payments until your debts are discharged.
When filing for bankruptcy Chapter 13, it pays to have an experienced lawyer. For the best Chapter 13 bankruptcy lawyer in Jacksonville, FL, contact Parker & DuFresne.
Filing for bankruptcy can be a scary process, but it’s important to remember that most of these misconceptions are just that – myths. Bankruptcy is often the best option for those who are struggling to pay their debts, and it can help you get your finances back on track.
If you have any other questions about the process of filing for bankruptcy, be sure to contact an attorney or credit counseling service for more information.
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If you’re thinking about filing for bankruptcy in Florida, it’s important to meet with a bankruptcy attorney. You can better understand your specific situation and the types of relief that might be available to you.
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