Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, which is a liquidation proceeding and involves selling your assets to repay your creditors, filing for Chapter 13 bankruptcy allows you to keep your property during your bankruptcy case. Instead of selling assets, you create a repayment plan that enables you to catch up on your debts. The repayment plan lasts three to five years and must be approved by the bankruptcy court. During this time, you repay all or a portion of your debt. The repayment plan must be submitted with your bankruptcy petition, or within 14 days after you file for bankruptcy. You make all monthly payments to your Chapter 13 bankruptcy trustee, who then distributes the funds to your creditors. The bankruptcy trustee is the individual appointed by the bankruptcy court to handle your bankruptcy. A Chapter 13 trustee has many duties, including ensuring all bankruptcy documents are completed properly and to manage your repayment plan.
Meeting of the Creditors
The meeting of the creditors, or 341 meeting, typically occurs about six to eight weeks after you submit your repayment plan to the bankruptcy court. The meeting of the creditors is informal in nature and typically held in the bankruptcy trustee’s office. You, your attorney and bankruptcy trustee assigned to your case attend the meeting. The bankruptcy trustee will review your bankruptcy petition and ask questions related to your filing. In addition, the meeting of the creditors is an opportunity for your creditors to ask questions of you regarding the repayment plan or pose objections to particular aspects of the plan. An objection to the plan can be completed online, but must be filed no later than during the meeting. Creditors are not required to attend the meeting of the creditors, and whether they do or not has no affect on whether they will be paid under your Chapter 13 plan.
About 45 days after the meeting of creditors, a confirmation hearing is held by the bankruptcy judge. The exact date of the confirmation hearing will differ, according to state law. During the hearing, the judge will review the repayment plan to determine if the plan is feasible. Your attorney will explain to the bankruptcy judge why the plan is feasible and answer any questions the judge may have regarding your financial situation or any property you would like to keep. If any issues arise that cannot be addressed at the 341 meeting, the bankruptcy trustee or any creditor can raise those issues during the confirmation hearing. Objecting parties at the confirmation hearing will also have an opportunity to explain to the bankruptcy judge why their version of a repayment plan should be approved instead of your plan.
Begin Repayment Plan
After your plan is confirmed, your repayment plan will begin immediately. You will make monthly payments to your Chapter 13 bankruptcy trustee who then distributes the funds to your creditors each month. Following the confirmation hearing, if a plan has not been approved by the bankruptcy judge, you can file a modified plan. The court will then hold an additional hearing to either confirm or deny the modified plan. If no feasible plan is presented to the court, the court has the option of dismissing your Chapter 13 bankruptcy case.