Chapter 13 Bankruptcy Riviera
The Bankruptcy Abuse Prevention and Consumer Protection Act introduced in 2005 made filing for bankruptcy a more difficult and more expensive process. However, Chapter 13 bankruptcy has grown in popularity, due to its practical and manageable way to deal with debt. For people who are able to secure a consistent source of income, Chapter 13 allows them to have the opportunity to pay debts down over time. Debtors create a payment plan outlining exactly who gets back and how they will pay them back. Additionally, once an agreement has been made on the plan, creditors are forbidden from collecting payment directly from you, essentially eliminating the everyday stress of being in catastrophic debt. If the debtor fails to make his or her payments, the court may convert it into a Chapter 7 liquidation claim or, in extreme situations, dismiss the case.
How it Works
The debtor must go through credit counseling and have proof showing that they have done this before filing for bankruptcy. Once this is done, a petition to the local court is the first order of business, along with 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 can file jointly.
The court assigns an impartial trustee to administer the case. This person serves many roles, including objective adjudicator, money distributor to creditors, and initiator of the “automatic stay” against creditors.
Before long, the trustee sets up a meeting between the debtors, himself, and the creditor, in which the debtor's financial status is discussed at length. To maintain impartiality, judges are not in attendance. An advisory meeting with an attorney before hand is probably a good idea.
Chapter 13 Protections
Once the trustee receives word of your case, he notifies the creditors of an “automatic stay” with regard to your account. Chapter 13 may also stop all foreclosure proceedings taking place on your mortgage, after which point the applicant is given a chance to bring any past-due payments current.
The Repayment Plan
Applicants must submit a repayment plan within 15 days of filing the petition. Regardless of whether or not the plan has been confirmed, payment must begin within 30 days of the file date. Debtors may choose payroll deduction as a form of payment. This is actually the court's preferred form of payment. Plans may be modified before and after the plan's confirmation.
Three kinds of claims are usually identified in the plan: 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 Riviera bankruptcy lawyers, don't hesitate to call us at 561-353-2500.
Portions reprinted from the office of the US Department of Justice.