Article written by Eric Bank
Chapter 13 bankruptcy is available for businesses and individuals with
steady income and a willingness to make good on most or all of their debts, but
who require extra time to recover a sound financial condition. Normally, you
have about three to five years to repay debts after filing Chapter 13. This
kind of bankruptcy is more complicated than are others. Businesses that file for
Chapter 13 bankruptcy can remain in operation and reach settlements with
creditors.
Here are the steps to follow to file Chapter 13:
1. Review all of your alternatives, and if
you choose Chapter 13, refer to material on the web, such as Chapter 13 Bankruptcy Basics from the United
States Court. Your secured and unsecured debt can't be more than $807,750 and
$269,750, respectively, and you are not allowed to file if an earlier
bankruptcy petition was disallowed in the last six months.
2. Gather information: income, expenses,
assets (including exempt assets) and liabilities. Include any liens,
judgements, unexpired leases, executory contracts and court ordered
commitments. You'll need this information, plus a list of accounts and
creditors, in order to complete numerous U.S. Court forms.
3. Attend the required credit counseling
from a bankruptcy-approved provider. When done, you'll be given a certificate
that is included in your filing.
4. Hand in your Chapter 13 petition to the
federal court in your home district. The forms can be found at stationary
stores and at the United States Courts Bankruptcy Forms
website. Be ready to complete many detailed forms, such as the Chapter 13
Meeting of Creditors Notices. The court will then name a trustee to supervise your bankruptcy, but the
trustee cannot offer legal advice.
5. Pay your fees. The court charges a
filing fee of $235 plus $75 for miscellaneous expenses. Pay the court clerk
when filing the petition. You can extend your payments over four installments,
with the final one required within three months.
6. File a repayment plan within 14 days.
It will include a schedule for your fixed regular payments to the trustee.
7. Attend the creditor meeting that the
trustee will oversee. Your creditors will query you about your finances and
ways they can get more of their credit repaid. The meeting usually occurs
within 50 days after the Chapter 13 filing. At this meeting, you may have the
opportunity to settle with some of the creditors, requiring you to then modify
your repayment proposal.
8. Attend the confirmation hearing. The
court convenes a hearing in which it can approve your repayment plan. Creditors
can come to this hearing and make objections at this time.
9. Start making payments. You are expected
to make biweekly or monthly payments to the court trustee for at least three
years.
