How To File Chapter 13 Bankruptcy

Understanding how to file Chapter 13 bankruptcy is the first step toward a fresh financial start. The Chapter 13 process is fairly long and involved, and potential filers are smart to learn as much as they can before taking the plunge.

Here’s a look at the process of filing a Chapter 13 bankruptcy case.

Working with a Bankruptcy Lawyer

While it isn’t mandatory to enlist the help of an attorney in a bankruptcy case, most insiders recommend doing so. The bankruptcy process involves a number of complex laws and requires filers to jump through many “hoops” in order to get the debt relief they need.

A lawyer can help with:

  • Choosing the right chapter. Chapter 7 and Chapter 13 bankruptcy provide very different types of financial relief. Choosing the right chapter is essential for any filer truly in need of financial assistance. An attorney who is familiar with the requirements for and benefits of each chapter can help you determine which fits in best with your life.
  • Developing a repayment plan: The central element in a Chapter 13 bankruptcy case is the three- to five-year debt repayment plan. If this plan isn’t up to par, the bankruptcy court will reject it and demand one that works. Filers must make monthly payments according to this plan for the duration of their case and if they can’t afford the payments, their case can be thrown out. Working with a lawyer allows filers to take advantage of the education and background only those in the legal profession can share.
  • Meeting deadlines: After submitting the initial bankruptcy petition, Chapter 13 filers must meet a number of other deadlines, including attending the creditors meeting, making their first monthly payment and completing the financial management course. Missing any of these deadlines can lead to dismissal of a bankruptcy case. Lawyers can help filers keep track of what needs to happen when.
  • Avoiding bankruptcy fraud: The penalties for bankruptcy fraud top out at a fine of $500,000 and jail time up to five years (in addition to having the bankruptcy case dismissed). Most filers aren’t in the mood for either of those, but few are aware of what constitutes bankruptcy fraud. A lawyer can help you understand the laws that govern bankruptcy and make sure you don’t intentionally or accidentally put yourself and your case at risk.

Still not convinced? Most bankruptcy lawyers offer free consultations so you can “test drive” one before actually committing.


The Pre-Filing Requirement

Since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA, to insiders), all bankruptcy filers have had to complete a credit counseling course before submitting their cases with the bankruptcy court.

This session must be done with a federally approved credit counseling service and filers must submit a certificate of completion with their initial bankruptcy petition (or else the court won’t take their case).

The session is intended to weed out any people who don’t really need bankruptcy protection. These folks are guided instead toward credit counseling, debt settlement or some other debt management plan. Everyone else is sent to bankruptcy court.


Submitting the Bankruptcy Petition

The bankruptcy petition is simply the paperwork that filers submit with the court to officially start their case. Shortly after the petition is filed (or, often, at the same time), filers must submit the following information:

  • Statement of income: This includes money from wages, salaries, tips, bonuses, inheritance and any other source.
  • Statement of debts: This should be exhaustive. A lawyer can guide you through how to list debts.
  • Statement of assets: This form details a filer’s possessions (including a home or home equity, a car, valuables, etc.).
  • Statement of expenses: Here, filers list items like mortgage/rent, utilities, childcare costs and so on.
  • Repayment plan: The actual deadline for submitting the repayment plan is 15 days after submitting the initial petition. That means that filers must be on top of things when they take the first steps toward Chapter 13 bankruptcy.


How to File Chapter 13 Bankruptcy: Ask a Lawyer

If you’re ready to learn more about the Chapter 13 filing process, it’s time to contact a bankruptcy lawyer practicing in your area.

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