Chapter 13 Bankruptcy

The debtor’s attorney performs the following functions in a typical Chapter 13 case:   (1) Examining the debtor’s financial situation and determining whether a Chapter 13 case is a feasible alternative for the debtor, and if so, whether a single or a joint case should be filed.   (2) Assist the debtor in obtaining the required prebankruptcy briefing on budget and credit counseling. (3) Assisting the debtor in the preparation of a budget.   (4) Examining the liens or security interests of secured creditors to ascertain their validity or avoidability, and taking the legal steps necessary to protect the debtor’s interest in such matters.   (5) Devising and implementing methods of dealing with secured creditors.   (6) Assisting the debtor in devising a Chapter 13 plan that meets the needs of the debtor and is acceptable to the court.   (7) Preparing the necessary pleadings and Chapter 13 forms.   (8) Filing the Chapter 13 forms and pleadings with the court.   (9) Attending the meeting of creditors, the confirmation hearing, and any other court hearings required in the case.   (10) Assisting the debtor in obtaining court approval of a Chapter 13 plan.   (11) Checking the claims filed in the case, filing objections to improper claims, and attending court hearings thereon.   (12) Assisting the debtor in overcoming any legal obstacles that may arise during the course of the case.   (13) Assisting the debtor in attending and completing the required instructional course on personal financial management.   (14) Assisting the debtor in obtaining a discharge upon the completion or termination of the plan.   The fee charged by an attorney for representing a debtor in a Chapter 13 case must be reviewed [...]

The debtor has the right to either dismiss a Chapter 13 case or convert it to a Chapter 7 case at any time for any rea-son.  However, if the debtor simply stops making the required Chapter 13 payments, the court may compel the debtor or the debtor’s employer to make the payments and to comply with the orders of the court.  Therefore, a debtor who wishes to discontinue a Chapter 13 case should do so through his or her attorney.

If the debtor is temporarily out of work, injured, or otherwise unable to make the payments required under a Chapter 13 plan, the plan can usually be modified so as to enable the debtor to resume the payments when he or she is able to do so.  If it appears that the debtor’s inability to make the required payments will continue indefinitely or for an extended period, the case may be dismissed or converted to a Chapter 7 case.

Unsecured creditors, including those with priority claims, must file their claims with the bankruptcy court within 90 days after the first date set for the meeting of creditors in order for their claims to be allowed.  Unsecured creditors who fail to file claims within that period are barred from doing so, and upon completion of the plan their claims will be discharged.  The debtor may file a claim on behalf of a creditor, if desired.  After the claims have been filed, the debtor may file objections to any claims that he or she disputes.  When the claims have been approved by the court, the Chapter 13 trustee begins paying unsecured creditors in the manner and in the amounts provided for in the debtor’s Chapter 13 plan.  Payments to secured creditors, priority creditors, and special classes of unsecured creditors may begin earlier, if desired.

If the court will not approve the plan initially proposed by a debtor, the debtor may modify the plan and seek court approval of the modified plan.  If the court does not approve a plan, it will usually give its reasons for refusing to do so, and the plan may then be appropriately modified so as become acceptable to the court.  A debtor who does not wish to modify a proposed plan may either convert the case to a Chapter 7 case or dismiss the case.

No.  It is illegal for either private or governmental employers to discriminate against a person as to employment because that person has filed a Chapter 13 case.  It is also illegal for local, state, or federal governmental agencies to discriminate against a person as to the granting of licenses, permits, student loans, and similar grants because that person has filed a Chapter 13 case.

No.  A Chapter 13 case is a civil proceeding and not a criminal proceeding.  Therefore, a person does not lose any legal or constitutional rights by filing a Chapter 13 case.

Yes.  A financial counselor has no legal authority to prevent a person from filing any type of bankruptcy case, including a Chapter 13 case.

The filing of a Chapter 13 case automatically stays (stops) all lawsuits, attachments, garnishments, foreclosures, and other actions by creditors against the debtor or the debtor’s property.  This stay is called the automatic stay.  A few days after the case is filed, the court will mail a notice to all creditors advising them of the automatic stay.  Certain creditors may be notified sooner, if necessary.  Most creditors are prohibited from proceeding against the debtor during the entire course of the Chapter 13 case.  If the debtor is later granted a Chapter 13 discharge, the creditors will then be prohibited from collecting the discharged debts from the debtor after the case is closed.  If the debtor has had a prior bankruptcy case dismissed within the past year, he or she may be denied the protection of the automatic stay.

Usually not.  In a Chapter 13 case, creditors are usually paid out of the debtor’s income and not from the debtor’s property.  However, if a debtor has valuable nonexempt property and has insufficient income to pay enough to creditors to satisfy the court, some of the debtor’s property may have to be used to pay creditors.