What is chapter 13 bankruptcy

You must also prepare a proposed plan for repayment of your debts. Your plan will provide for monthly payments to the trustee for distribution to your creditors.

The amount of your monthly payments depends on a number of factors, including your income and expenses. All of these items must be prepared on court-approved forms. Before you can file for bankruptcy, you must complete a credit counseling course. When you complete the course, you receive a certificate of completion, which is good for days.

After you file bankruptcy, and before you can receive a final discharge of your debts, you must complete a debtor-education course. Both of these courses can be completed online. Depending on your financial situation, you may have to pay a course fee. Once you file your Chapter 13 case, the court will appoint a trustee. The trustee has a number of duties, one of which is to make the payments to your creditors. This comes from the money you pay to the trustee pursuant to your plan.

Shortly after you file the bankruptcy, you must submit a copy of your most recently filed federal tax return, or a transcript of it, to the trustee. You must also file all required state, federal and local tax returns, and continue to file them during the period of the plan. You must give to the trustee any net state and federal refunds that you receive. Before you can receive a discharge, you must certify that all domestic support obligations have been paid in full or that your plan provides for the payment of the obligations.

A domestic support obligation is essentially spousal support alimony or child support. You'll also have to take debtor education courses if you file on your own. And that's just the beginning. There's a list of documents you'll need to take care of, as well as the specific repayment proposal you need to submit for Chapter That proposal gets reviewed by a court-appointed trustee, who contacts your creditors before approving your submission.

Overall, neither filing is an easy process to handle on your own, and even minor mistakes on your end could be a setback for your case. So, whether you file for Chapter 7 or Chapter 13 bankruptcy, it's typically a good idea to hire a lawyer to help you petition. A bankruptcy attorney's price depends on the nature and complexity of your filing, with Chapter 13 filings on the pricier end, but the price tag doesn't necessarily mean a lawyer is out of the question for you.

Discuss payment plans with potential attorneys, check out local pro-bono free lawyers and legal aid offices , or use an online tool like Upsolve to cover your bases when it comes to bankruptcy. The Bottom Line Bankruptcy can sound scary, but it might be a necessary step to realign your finances and move forward without debt piling ever higher upon you. No matter what, reach out for help with professional advice and stay informed on your rights and options—your situation is never hopeless.

Before and after you file bankruptcy, it's important to keep a close eye on your credit. Experian's free credit monitoring can alert you to score changes, including improvements that might come in the future once your bankruptcy is in the rear-view mirror.

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If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well. Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it.

Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided.

If you do not have a current personal report, Experian will provide a free copy when you submit the information requested.

Additionally, you may obtain a free copy of your report once a week through April at AnnualCreditReport. A Chapter 7 bankruptcy, on the other hand, remains on credit reports for 10 years.

Bankruptcy can have a more severe negative affect on your credit than mere missed payments. A Chapter 13 bankruptcy will appear on your credit reports as a derogatory mark for seven years from the date you filed the petition. The number of points your credit scores will drop will vary depending on your current scores and other factors relating to your financial situation.

For more on this, check out our article on how to build credit after a bankruptcy. Because of those lower credit scores, you might have trouble with situations that require a credit check: getting a job, applying for an apartment rental or otherwise.

Interest rates and fees on loans will typically be higher, too. Although you may get a chance to modify the plan, missing payments could lead to a dismissal. If that occurs, you stand to lose any assets you were trying to protect. This chapter discusses six aspects of a chapter 13 proceeding: the advantages of choosing chapter 13, the chapter 13 eligibility requirements, how a chapter 13 proceeding works, making the plan work, and the special chapter 13 discharge.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time.

Another advantage of chapter 13 is that it allows individuals to reschedule secured debts other than a mortgage for their primary residence and extend them over the life of the chapter 13 plan. Doing this may lower the payments.

Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors.

Individuals will have no direct contact with creditors while under chapter 13 protection. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor. An individual cannot file under chapter 13 or any other chapter if, during the preceding days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.

In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing.

There are exceptions in emergency situations or where the U. If a debt management plan is developed during required credit counseling, it must be filed with the court. A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence.

Unless the court orders otherwise, the debtor must also file with the court: 1 schedules of assets and liabilities; 2 a schedule of current income and expenditures; 3 a schedule of executory contracts and unexpired leases; and 4 a statement of financial affairs.

The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. The debtor must provide the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case including tax returns for prior years that had not been filed when the case began.

A husband and wife may file a joint petition or individual petitions. The Official Forms may be purchased at legal stationery stores or downloaded from the Internet at www. They are not available from the court. Normally the fees must be paid to the clerk of the court upon filing.

With the court's permission, however, they may be paid in installments. The number of installments is limited to four, and the debtor must make the final installment no later than days after filing the petition.

For cause shown, the court may extend the time of any installment, as long as the last installment is paid no later than days after filing the petition. If a joint petition is filed, only one filing fee and one administrative fee are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:.

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing.

In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household's financial position. When an individual files a chapter 13 petition, an impartial trustee is appointed to administer the case.

In some districts, the U.