Chapter 13 Debtor’s Court is often of good option for consumer debtors who have fallen behind on their debt payments, but who do not want to or not eligible for Chapter 7 Bankruptcy. Types of debts that can be included in Chapter 13 Debtor’s Court include: mortgage arrearage, auto payments, credit cards, medical bills, taxes, studen loans, child support and other secured debts and unsecured debts.
Unfortunatley, many people do not understand how Chapter 13 Debtor’s Court works and how it can help them. The following is a summary of Chapter 13 Debtor’s Court.
Documents needed to file Chapter 13 Debtor’s Court:
- Statements from creditors, bill collectors, and collection attorneys including mortgage statements, auto loan statements, credit card statements, medical bills, back taxes, child support arrearage, etc…
- Pay-stubs for the last eight weeks.
- Most recent income taxes; you may need income taxes for the last four years. If you do not have your tax returns because you didn’t file them (and you were not exempt from filing) it is critical you get all taxes filed.
- Original loan docs for secured debts including mortgages and auto loans.
Timeline for filing and completing Chapter 13 Debtor’s Court:
- After getting your documents together, you will want to meet with an attorney who regularly files and handles Chapter 13 Debtor’s Court cases. Bankruptcy practice has never been simple, but since the new bankrutptcy laws passed, it has become even more complex and specialized.
- After meeting with the bankrutpcy attorney and deciding to file for Chapter 13 Debtor’s Court, you will first need to complete a pre-filing credit counseling course. The debtor is usually guided through this process by the bankruptcy attorney and involves filling out a form and paying a fee to the credit counseling agency.
- After receiving the certificate of completion of the the pre-filing credit counseling, the bankruptcy attorney will file the bankruptcy petition.
- The time period from the first time the debtor calls the attorney to the time the debtor’s court case is actually filed can span from 24 hours (in the case of an emergency) to a week.
- The debtor will need to make the first Chapter 13 payment to the Chapter 13 Trustee within the first 30 days; the bankrutpcy attorney will explain exactly when and how the payment should be made.
- After the case is filed, usually the first hearing is held about 30 days after filing; this is the Meeting of Creditors. The debtor and the attorney must attend this hearing.
- Usually, the second hearing is about 60 days after the case is filed. This is commonly called the Confirmation Hearing and is normally the first time debtor will see the Bankrutpcy Judge.
- If the Chapter 13 Plan is confirmed at the Confirmation Hearing, and as long as the debtor makes all the necessary payements there will not be any additional hearings. Unfortunatley, this is rarely the case. In most Chapter 13 cases, debtors either fall behind on their Chapter 13 payments or their post-petition mortgage payments.
- In the event the debtor falls behind on any payments, there will be an additional hearing(s).
- If the debtor makes all the payments (usually after a three to five year period), a Discharge will be granted to the debtor and the case will be closed.
How much does Chapter 13 cost?
- Attorney fees will vary from state to state and jurisdication to jurisdiction.
- In the Birmingham area, the typical attorney fee for a Chapter 13 case is $2,500. The fee may vary under special circumstances.
- Normally, the entire fee is not paid by the client at the time the case is filed. Historically, bankruptcy attorneys have been paid “through” the Chapter 13 plan, from the montly payments paid by the debtor. This practice has changed over the last few years, due to the new bankrutpcy laws.
- Currently, an upfront fee is typically required to actually file the debtor’s court case.
- Other fees include the filing fee ($274), credit counseling ($35-$50), credit report fee (~$40); other fees may be included depending on case specifics.
For more information on Chapter 13, see Jonathan Ginsberg’s theBKblog.
If you have questions about Chapter 13 Debtor’s Court, contact me.
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