Bankruptcy Chapter 13 Process in Maryland and Washington DC
Information Provided by our Chapter 13 Bankruptcy Attorney
If you choose to file for Chapter 13 bankruptcy, you should be aware of the complex bankruptcy laws and regulations that you must comply with in order to satisfy your obligations. You should consider speaking with an attorney to help you file for bankruptcy and to create your Chapter 13 repayment plan.
Filing a Petition for Chapter 13 Bankruptcy
In a bankruptcy Chapter 13 case, a debtor must first file a petition with the bankruptcy court in the jurisdiction where that debtor resides or has resided for the greater part of the last 180 days. The petition must include the following information:
- List of all creditors and the amount of debt due to each creditor
- The source, amount, and nature of the debtor’s income
- List of all the debtor’s property (both real property and personal assets)
- List of all monthly living expenses, including food, clothing, shelter, utilities, taxes, and medical expenses
Married individuals filing bankruptcy must also provide the above information for their spouses, even if they are filing a separate bankruptcy petition. In addition to the petition, debtors must also file the following documents with the court:
- A schedule of assets and liabilities
- A schedule of current income and expenditures
- A statement of financial affairs
- A schedule of executory contracts and unexpired leases
Because credit counseling is required within 180 days prior to filing Chapter 13 bankruptcy, the debtor must also file the following documents:
- Certificate of credit counseling
- Copy of any debt repayment plan developed
- Evidence of payment from employers received within 60 days prior to filing
- Statement of monthly net income
- Document detailing any anticipated increases in income or expenses after filing for bankruptcy
- Record of any interest the debtor has in federal or state qualified education and tuition accounts
Debtors must also pay the applicable case filing fee ($235, as of January, 2016) and administrative fee ($75, as of January, 2016) to the clerk of the court upon filing. However, the court may approve paying such fees in installments.
Appointment of a Trustee
After the petition is filed, the court appoints a trustee. Then, the bankruptcy clerk provides notice of the bankruptcy proceedings to all creditors provided by the debtor. The Chapter 13 trustee evaluates the case, collects payments from the debtor, and disburses payments to creditors.
Meeting of the Creditors
Twenty to fifty days after the debtor files the Chapter 13 petition for bankruptcy, the trustee must hold a meeting of the creditors. During this meeting, the debtor must appear and answer, under oath, any questions regarding his or her assets and liabilities. Unsecured creditors have 90 days after the meeting of the creditors to file their claims with the court.
Any problems with the Chapter 13 repayment plan are discussed either during or shortly after the creditors meeting. Following the meeting, the debtor, Chapter 13 trustee, and creditors attend a hearing on the debtor’s proposed Chapter 13 repayment plan.
The Chapter 13 Plan & Confirmation Hearing
The debtor must file a repayment plan with the court within 15 days of filing the bankruptcy petition. This plan must include payments of fixed amounts to the trustee on a regular basis, as well as terms indicating the amount of each payment that the trustee should then distribute to the creditors. The plan must properly provide for each type of claim, as dictated by bankruptcy laws. There are three types of claims:
- Priority claims: claims granted special status under the Bankruptcy Code, such as taxes and fees associated with the bankruptcy proceeding
- Secured claims: debts secured by collateral
- Unsecured claims: debts for which the creditor has no special collection rights
The plan must completely repay all priority claims, unless the priority creditor agrees to treat the claim differently. If the debtor wishes to retain collateral subject to any secured claims, then the secured creditor must receive at least the value of the collateral under the repayment plan. Additionally, certain types of secured loans require complete repayment in order to maintain ownership of the collateral. Payments to secured creditors may be made over the original loan repayment schedule, rather than within the course of the bankruptcy proceedings, if certain requirements are met. Unsecured claims need not be paid in full if the unsecured creditors receive at least as much under the plan as they would if the debtor’s assets were liquidated under Chapter 7 bankruptcy.
Within forty-five days after the meeting of the creditors, the bankruptcy judge must hold a confirmation hearing to decide whether to confirm the Chapter 13 repayment plan. Creditors may object to the plan during this hearing. Once the court approves the plan, the trustee will begin distributing funds to the creditors as specified in the Chapter 13 plan as soon as reasonably practicable. The debtor must begin making payments to the trustee according to the terms of the repayment plan, even if the court has not yet approved the plan. If the court refuses to confirm the plan, then the case is dismissed. The court may then authorize the trustee to keep any funds necessary to cover costs. However, all other funds not yet paid to creditors must be returned to the debtor.
After the court confirms the plan, the debtor must continue to make regular payments to the trustee. During bankruptcy, the debtor should not incur new debt without first obtaining the trustee’s permission. This is because such debt may hinder the debtor’s ability to repay debt under the Chapter 13 plan. If a debtor fails to make timely payments, fulfill any domestic support obligations, or make required tax filings during the bankruptcy proceedings, the court may either dismiss the case or convert it to a Chapter 7 bankruptcy case, thereby liquidating the debtor’s assets.
Modifications to the Chapter 13 Plan
If circumstances change after filing the petition, then the debtor may request a modification of the Chapter 13 repayment plan. Such changes include the creditor objecting to the plan or the debtor failing to list all creditors. You can modify the plan both before and after confirmation of the plan. If the modification request comes after confirmation, either the unsecured creditor or trustee may request it.
Chapter 13 Discharge and Information about Chapter 13 vs Chapter 7
Unlike Chapter 7 bankruptcy, the Chapter 13 discharge applies only to those debts covered by the Chapter 13 repayment plan. However, this discharge of debt allows the debtor to focus on rebuilding his financial stability while being relieved of any liability on the debts paid pursuant to the Chapter 13 repayment plan.
Conclusion to Bankruptcy Chapter 13 Information
If you are facing possible bankruptcy proceedings, please take advantage of the free consultation that our Chapter 13 lawyer offers. There are so many things for you to plan for and to think through and to file that you need someone that has your best interests in mind. You can call us now or fill out the form on our site. We will help you figure out your options in Washington DC and Maryland.