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A Chapter 13 Bankruptcy is a consolidation or reorganization of debts. Through a Chapter 13, you can repay your debts over the course of a 3-5 year plan. A debtor must have a regular source of income, and be able to afford basic living expenses as well as the monthly Chapter 13 payment. In most cases, unsecured debts can be significantly reduced and are paid without interest. Under certain circumstances, even a car loan can be greatly reduced. As long as the debtor completes the Chapter 13 plan, the remaining dischargeable debts will be eliminated.
A Chapter 13 Bankruptcy is a powerful tool for stopping foreclosure, vehicle repossession, creditor harassment, and student loan garnishments. It is also a great alternative for those who do not qualify for a Chapter 7 for various reasons including the means test or for those with nonexempt property.
Step One: Free consultation with Attorney Truran. At this appointment we will evaluate your financial situation, discuss which chapter best suits your needs and goals, talk about whether or not a Chapter 13 is right for you, and plan our course of action.
Step Two: Complete credit counseling course. Attorney Truran will discuss your options and how credit counseling works. The credit counseling certificate must be filed with the bankruptcy petition.
Step Three: Petition filing with the Bankruptcy Courts. At this second meeting, we will review your petition and begin the actual filing process. The petition is like a “financial accounting” for the courts which includes all of you assets and debts as well as your income and expenses. At this appointment we will complete your financial plan, discuss your Chapter 13 plan payment, and instruct you as to how to make those payments. Once your petition is filed, you will obtain your case number, court date, time and location. You will then be under protection of the Bankruptcy Court. Creditors may not call you, mail you bills, sue you, garnish your wages or cut-off your utility service. Your first payment is due within 30 days of your filing date, and every month thereafter.
Step Four: Complete debtor education course. Attorney Truran will also guide you in this process. The debtor education certificate must be filed with the courts after your bankruptcy filing but before you can be granted a discharge. In a Chapter 13, your discharge occurs at the end of your 3-5 year plan. It is a good idea to complete the debtor education relatively soon after filing. If you wait 3-5 years, you may forget, and will jeopardize your discharge.
Step Five: The Meeting of Creditors. This court hearing is held approximately one month after filing. Your appearance is mandatory; however, Attorney Truran will be there with you. At this hearing a bankruptcy trustee will ask you questions, and review your petition and chapter 13 plan. Typically, the hearing lasts approximately ten minutes. Even though the hearing is called the meeting of creditors, they rarely attend this meeting.
Step Six: Discharge. At the end of your 3-5 year plan, as long as all money required by the plan has been paid, you will get your discharge order in the mail. The discharge order wipes out all remaining dischargeable debt, and you have successfully completed the bankruptcy process.