Chapter 13 Basics

When most people think of bankruptcy, they think of Chapter 7's. Bankruptcies filed under that chapter are far more common than any other, as it involves discharging unsecured debt and liquidating assets. Chapter 13, however, is also available to consumer debtors. This form of bankruptcy is a debt consolidation/repayment plan. People may choose to file this chapter if they cannot qualify for a Chapter 7 (whether because of income or statutory time filing requirements), they have too many assets such that a Chapter 7 would be unwise, or they are looking to catch up on a car or home.

At the heart of a Chapter 13 is a repayment of your debts anywhere from 10% to 100% over the course of 3 to 5 years. Determining where your situation is on that spectrum requires an analysis from your experienced bankruptcy attorney, but generally has to do with what kind of debt you are paying back, how much you have to pay back, and what kind and how much income you have. This payment, called the trustee payment, is proposed to the bankruptcy court as part of your Chapter 13 plan and requires the court's approval.

The procedure for the Chapter 13 begins much like the Chapter 7. After filing, you are required to attend a Meeting of Creditors with your attorney. At this meeting, the Chapter 13 trustee or one of their representatives will question you on your case to ensure that the schedules are accurate and that the Chapter 13 plan is feasible. The goal here is to not only ensure that everything is accurate, but that any amendments or changes to the plan are given by the trustee's office to ensure a smooth process to confirmation.

After the Meeting of Creditors, your attorney will take any changes that are required by the trustee and make them to your petition. At this point the goal is to ensure that the case will be confirmed at the confirmation hearing at some point in the future after the 341 Meeting. Often, your Chicago bankruptcy lawyer will work with the trustee's office ahead of time to ensure that they can recommend your case for confirmation.

Once your case is confirmed, you continue to make the payment for as long as the case requires each month. You'll probably be sending this payment via certified check or money order to a P.O. Box the trustee uses to process payments. If there are any issues at any point in time in the case, you should definitely contact your attorney.