The Chapter 13 Bankruptcy Process
In a Chapter 13 bankruptcy case, you will file a Chapter 13 Plan with the United States Bankruptcy Court, setting forth a proposal for dealing with your creditors. The plan you propose will be specific to your unique set of circumstances.
Depending on your specific financial situation, you may propose to repay your unsecured creditors as much as 100% of the amount owed or as little as 5% of the amount owed. Your plan will provide that you will make monthly payments to a Chapter 13 Trustee, who will then disburse payments to your creditors.
Although Chapter 13 allows a certain amount of flexibility, your plan must comply with the requirements of the United States Bankruptcy Code. This in practice means that you must prove that your creditors will receive as much in your Chapter 13 filing as they would have received in a Chapter 7 filing. Your creditors and the Chapter 13 Trustee will have an opportunity to object to your plan if they believe that you are not acting in good faith or if your plan is not feasible. Often such objections are resolved by making certain changes to your plan.
By the end of the plan making process, you will have agreed to what is effectively a “lump sum” payment. This single monthly installment combines all of your outstanding debts and must be paid over a period of 3 to 5 years. The good news is that the amount of this payment is not determined by the total size of your debt. Instead, it is calculated by your ability to pay – your amount of monthly disposable income.
Your plan is not binding on your creditors until it is confirmed (approved) by the Bankruptcy Court. The Court will schedule a formal hearing called a Confirmation Hearing and if the plan is approved, the Court will enter an order confirming the plan. At that point, your plan is legally binding on all of your creditors.
We can assist you in formulating a fair and reasonable plan that is in compliance with all requirements of the U.S. Bankruptcy Code. Our team can also help you field objections, advocate on your behalf, and make any necessary adjustments to your plan.
Your Guide in Chapter 13 Bankruptcy
Our Howell Chapter 13 bankruptcy attorney at Fedoroff Firm, LLC can support you throughout your filing. We have over 20 years of experience and have helped hundreds of clients navigate the bankruptcy process. Our team can work directly with you to help understand the implications of your filing, including estimating what you will be expected to pay on a monthly basis, what negative creditor actions will be stopped, and what debts you may be able to discharge. We can serve as your advocate in all court proceedings and ensure you are given the opportunity to overcome your debt and build a new, fresh financial future.