The Chapter 13 Process

The first step you must take before filing your Chapter 13 Bankruptcy petition is complete the required pre-filing credit counseling course. You will be given a certificate which has to be filed with the court. The pre-filing credit counseling course could be done online or over the telephone. It typically take no more than 30 minutes. The pre-filing credit counseling course must be taken from an agency approved by the United States Trustee's office for the state you are filing bankruptcy in. The fee ofr taking the pre-filing bankruptcy credit counseling course is about $50.00.

 The Chapter 13 Repayment Plan

An important aspect of the Chater 13 Bankruptcy process is the Chapter 13 Plan. It is a debt repayment plan that sets out how the debtor intends to repay his or her creditor and over what period of time the payment will run. The Bankruptcy court must approve the Chapter 13 Plan for the debtor to succeed with his or her Chapter 13 case. TheBankruptcy court holds a confirmation hearing before confirming the Chapter 13 Plan. The debtor must appeat before a bankruptcy judge at the confirmation hearing.

What Should be Included in The Chapter 13 Plan 

It CANNOT be overstate how important it is to prepare a proper Chapter 13 Plan. Your Chapter 13 Bankruptcy case relies on it. While there are several available formats that may be used, each Chapter 13 bankruptcy case must be structured based on the specific facts and circustances of the case. How the Chapter 13 Plan is structured and what is included should be guided by the realities of the the individual case.

The Chapter 13 plan must include provision for repayment of certain debts in full. These debts are called "priority debts." Priority debts include child support and alimony, wages you owe to employees, and certain tax obligations. The Chapter 13 plan must also include your regular payments on secured debts, such as a car loan or mortgage, as well as repayment of any secured debts that you have fallen behind on. While the Chapter 13 debtor could obtain a discharge on unsecured debts such as credit card payments, medical bills, judgments, etc, the  plan must show that disposable income is going towards the repayment of unsecured debts. Unsecured debts may therefore be discharged if there isn't sufficient income to repay them. 

If Plan Payments Are Not Made

Many Chapter 13 Bankruptcy cases are dismissed because the debtor is unable to make the plan payments. If you do NOT make plan payment the Chapter 13 trustee will file a motion with the Bankruptcy Court asking the court to dismiss your Chapter 13 case. If during the Chapter 13 Bankruptcy process you no longer have as much disposable income as when your plan was confirmed, you may modify the Chapter 13 Plan to be consistent with your disposable income rather than fall behind in your plan payments and risk dismissal of your case.

Some case you make find yourself unable to continue with the Chapter 13 plan payments. This may be becuase of loss of employment, illness, or some form of extreme hardship. If you are in such a situation you should contact a competent bankruptcy lawyer immediately. Debtor who suffer a hardship during the Chapter 13 process may be able to get their debts discharge as in a Chapter 7 case without having to make the unsecured payments in the Chapter 13 Plan. Another option may be to convert to Chapter 7 Bankruptcy. Learn more about Chapter 7 Bankruptcy.