A Chapter 13 bankruptcy is for individual wage earners and offers debt reorganization. A Chapter 13 Trustee is appointed to oversee your case and you pay a monthly payment to the trustee who then disburses the payment to your creditors. A Chapter 13 bankruptcy pays back a portion of your debt. Repayment can be anywhere from 0 to 100% of the debt. A Chapter 13 bankruptcy can last anywhere from three to five years. Once your Chapter 13 plan is approved by the Court, you continue making monthly payments until your plan is complete. Any remaining unpaid debt is discharged and you are not liable for those debts. The Chapter 13 does have a debt limit, so a qualified attorney can help you determine if you qualify for a Chapter 13. Businesses may not apply for Chapter 13 bankruptcy.
Chapter 13 Bankruptcy Steps
- Attorney Consultation: Call my office to schedule a consultation. The consultation may be at my office or over the phone. If bankruptcy is right for you, I will give you an Information Packet with a Questionnaire to fill out and return to me.
- Fill out the Questionnaire: The Questionnaire asks all the questions the official bankruptcy forms ask. You’ll be asked to list your assets, liabilities, income, expenses and answer questions about your past financial history. Once the Questionnaire is completed and returned to me, I will analyze the information and make sure you are a good candidate for Chapter 13.
- Complete Credit Counseling: You must complete credit counseling prior to filing a bankruptcy. The credit counseling may be done in person, on the phone, or online for a minimal fee. I will give you a list of agencies that offer this service.
- Filing of Case: I will prepare the official bankruptcy forms for your signature and review. After the papers are signed, I will file your case. You will receive a case number and an “Automatic Stay” goes into effect to protect you from your creditors.
- Attend the meeting of creditors: In approximately 20 – 40 days after the filing, the court will notify you of the date and location of your meeting of creditors (also called the 341 hearing). The meeting of creditors is a mandatory hearing where the trustee and your creditors (who rarely show up) can ask you questions about your financial affairs and the information disclosed in your bankruptcy petition. The meetings take place in downtown Wichita.
- Make your trustee payments: Your reorganization plan consists of making monthly payments to a Chapter 13 Trustee and the Trustee then disburses the money to your creditors. Your attorney initially proposes the amount of the monthly payment when your case is filed. If a creditor or the Trustee objects, then negotiations take place and your monthly payments may go up or down. The monthly payments may last anywhere from 3 to 5 years. You must make timely payments or your case may be dismissed.
- Receive your discharge: After making your monthly trustee payments for the prescribed amount of time, you will receive a discharge and the bankruptcy is over.