Are you thinking about filing Chapter 13 bankruptcy and wonder what happens after you file? While each bankruptcy case depends on the filer’s financial circumstances, most Chapter 13 bankruptcies go through the following process.

Beginning of the Automatic Stay

The day your bankruptcy case is filed the bankruptcy court institutes an automatic stay.  This prohibits creditors from taking collection actions for the duration of your bankruptcy.

The bankruptcy court will notify each of your creditors in writing that you have filed for bankruptcy. If a creditor contacts you before they receive notification, you should give them your bankruptcy case number. You should also give them the contact information of your lawyer, if you have one. Any attempt to communicate with you after they have received notification violates bankruptcy law. You can report them and the creditor could receive punishment.

Submitting a Repayment Plan

The purpose of Chapter 13 bankruptcy is the reorganization of debt into a manageable repayment plan for the debtor. The repayment plan is a legally binding document that details how you plan to pay your creditors what you owe. The extent of the repayment plan depends on your particular financial circumstances.

Most repayment plans last between 3 to 5 years and involve you paying a set amount of money each month to the bankruptcy trustee. The trustee will then distribute the money to your creditors. You may pay some creditors in full by the end of this time, but most of your creditors will only receive a portion of what you owe them.

Your proposed repayment plan must be submitted to the bankruptcy court within 15 days of filing your case and first payment made within 30 days. The process of creating a Chapter 13 bankruptcy repayment plan can be complicated. You may want to work with an experienced bankruptcy lawyer.

Meeting of Creditors and Confirmation

Within 45 days of filing your bankruptcy case, you must attend the 341 Meeting of Creditors. This meeting typically takes place at the Federal District Court in which you filed your case or by video conference. At the meeting, the bankruptcy trustee will ask you questions to clarify your finances and the documents you filed. Questioning usually only takes between 5 and 20 minutes and only requires yes or no answers. Your creditors also have a chance to question you in the hearing.. Most creditors choose not to attend the 341 meeting.

The bankruptcy trustee and your creditors may object to your proposed repayment plan. If they have no objections, the court usually confirms the plan within 30 days of the 341 meeting. But, if they have objections you will have the chance to resubmit a modified repayment plan for confirmation. Most plans get confirmed within 70 days of filing the bankruptcy petition.

Completing Repayment Plan and Discharge

Once your repayment plan gets confirmed, you must continue to make timely payments to the bankruptcy trustee each month for the duration of your plan. You must also continue to make payments on debts, such as your mortgage or car payment, which you proposed to pay outside of bankruptcy.

If you face financial difficulties during the 3 to 5 year time frame of repayment, you can petition for a modified repayment plan.

Once you make all the payments under the repayment plan, you will qualify for a discharge of your debts. This means your creditors must consider your debts paid. They can no longer try to collect payment from you for those debts.

Getting Help from a Bankruptcy Lawyer

You can file Chapter 13 bankruptcy on your own, but it can be complicated. You may not understand how the various bankruptcy laws apply to your financial situation and how to make the best choices for your case. An experienced bankruptcy lawyer will know how bankruptcy laws affect your case. They will know the best actions to take to get you a financial fresh start.

Brock & Stout’s bankruptcy lawyers have over 25 years of experience helping our clients get out from under the burden of debt. We understand the difficulties heavy debt can bring to your personal life and would love to help you gain financial freedom. Contact us for a free evaluation of your financial situation to see if our family can help your family.