Planning to file for bankruptcy but want to keep all of your properties? File Chapter 13 bankruptcy where you can repay a portion of your debts while keeping all your properties for 3-5 years.
Here is the process and what to expect when moving forward with Chapter 13 bankruptcy filing.
Preparation for filing.
Before you are eligible for filing you will need to take a credit counseling course. You will need to complete it within 6 months of the time when you file. You can also do it online but it should be from one of the agencies approved by the department of justice. To find the list look at the website of the department of justice.
If you meet certain requirements, you might be excused from the course, for example, if you must file immediately to stop wage garnishment or other financial consequences.
Filing the petition and scheduling the repayment plan.
Before you file for chapter 13 bankruptcy, you will require an attorney, who will be able to guide you through the process and can even help you decide if it is the right choice.
Filing for the petition will put an automatic stay on all the collection actions for the rest of your case.
Within 15 days after filing for a petition, you will have to provide the court with your repayment plan. You’ll have to provide detailed financial information as it relates to your income and your debts. You will have to prove that you have enough disposable income to repay the debts.
The role of your bankruptcy trustee.
Even before your repayment plan is approved, you will have to start your payments but you will not pay directly to your creditors but instead to a court-appointed bankruptcy trustee. He is the person who will oversee your case.
Your payments will begin within 30 days from the date of your filing of the petition.
Bankruptcy trustees not only collect your payments but they also see that you are adhering to the bankruptcy laws throughout your case.
Gaining approval for your repayment plan.
Within 45 days from your filing, you will have your 341 meeting with your creditors and trustees. Here they will ask you questions relevant to your case like your income and examine your repayment plan.
If any creditors object, they can file for it within 30 days from the meeting.
The last step is the confirmation hearing, here the trustee will make his/her recommendation about the case and last chance for your creditors to oppose. The judge will make the final call.
How a bankruptcy case impacts your credit.
To complete the repayment plan of a chapter 13 case takes about 3-5 years.
You might still be taking new loans while the case is going on if it is for a reasonable item and should not interfere with your current plan.
Even after your case is complete, the case will impact your credit report majorly. Here the creditors will give you loans but interest might be higher than usual. From the date of filing, the impact will be there on your report for 7 years.
If your case is dismissed.
It might get dismissed if the court does not agree with your plan or cannot comply with the court. If dismissed you might be able to apply for chapter 7 bankruptcy.