Chapter 13 Bankruptcy Mangonia

Chapter 13 bankruptcy is a popular way to manage debt due to its practical approach. Designed for working individuals who secure a consistent source of income, Chapter 13 bankruptcy allows participants to devise a repayment plan. That plan will outline exactly how all debt will be paid within the course of five years. However, if the debtor does not make the payments as outlined in the plan, the court may either dismiss the case or convert it into a Chapter 7 liquidation claim.

How it Works

After having gone through a mandatory credit and money management counseling program, one must petition to the court his application for Chapter 13 bankruptcy. Applicants must also bring a list of documents that illustrate your current financial status. These documents should include accounts of assets, liabilities, current income, expenditures, all financially-binding contracts, unexpired leases, and all other things regarding financial affairs. Married couples may file jointly, although they must bring documents for both participants.

Almost immediately, a trustee administrator is assigned to the case. This person objectively adjudicates the case, distributes payment to creditors, and initiates the “automatic stay” against creditors, which eliminates the daily stress of collection calls and increasing interest rates. Within 12 weeks, a meeting is setup between the applicant, the trustee and his creditors. The debtor's financial status is discussed at length during the meeting. Judges do not attend.

An advisory meeting with an attorney before hand is probably a good idea. A good legal advisor would be able to walk you through the entire process to make sure that things run smoothly.

The Repayment Plan

Within 15 days of applying the repayment plan must be submitted. Payment usually begins about one month after the plan is submitted, regardless of whether or not it has been confirmed. Payroll deduction is usually the preferred form of payment. Plans may be modified before and after the plan's confirmation.

Debtor usually identifies three types of claims: priority claims, involving taxes and associated bankruptcy fees; secured claims, involving secured property debt; and unsecured claims, which refers to most other forms of debt. Only priority claims must be paid in full.

All of the information provided is not meant to be substituted for legal counsel. It is meant to provide only information rather than be the sole source of advice.

If you have any questions for our Mangonia bankruptcy lawyers, don't hesitate to call us at 561-353-2500.

Portions reprinted from the office of the US Department of Justice.