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An In-Depth Look at the Process of Chapter 13 Bankruptcy

Filing for bankruptcy is a step that must be taken after thorough consideration and deliberation. It is an official declaration that your liabilities have exceeded your assets and you cannot pay back your loans or meet other financial obligations.

When filing for bankruptcy, you can either qualify for chapter 7 or chapter 10. However, the latter among the two is more complication to understand because of the complexities involved. In this post, we have discussed the bankruptcy process of chapter 13 in detail. Continue reading to know more about it:

A Brief Overview

In this type of bankruptcy, instead of surrendering from the loan, the borrower drafts a new repayment plan and presents it to their creditors. It is a revised plan with altered payment conditions as compared to the original ones. Here is how this process begins:

Step 1: Filing of Petition

It is the first step of filing for chapter 13 bankruptcy. In this step, the borrower/debtor files for a voluntary petition. It is important to note here that filing payment plan and schedule may not be necessary here; it can be done at a later stage of filing for bankruptcy. In this step, the details related to the assets and liabilities of the debtor are also compiled.

However, in this repayment plan, a roadmap is drafted. It gives a clear direction of how the debtor is going to repay each loan they have taken. A 3 or 5-year repayment schedule is formed. The amount is paid to the standing trustee by the debtor on monthly basis. The trustee then distributes the amount to the creditors in the decided ratio. It usually depends on the amount of the loan and its type.

Step 2: Attend Creditors Meeting Scheduled by the Bankruptcy Court

Once the voluntary petition is signed and the repayment plan is formed, the next step is to hold a creditors meeting. This meeting is scheduled by the bankruptcy court. This meeting is attended by the debtor, creditors, and the trustee. The trustee and creditors ask various questions to debtors related to their financial condition and the repayment schedule they have formed. It is important to note that this meeting is not mandatory to be attended by the creditors.  

Step 3: Confirmation of Repayment Plan

This is a lengthy step as it can take a time of few months for its completion. Creditors may also raise objections on the repayment plan in this phase. Therefore, it may have to be altered owing to these objections or the trustee’s feedback. Furthermore, some other factors may also compel to change the repayment plan. However, after it has received confirmation, no term of the repayment plan or schedule can be altered provided permission has been obtained from the court.

Step 4: Discharge

This is the last step in completing the chapter 13 bankruptcy process. It implies that the debtor is free from repaying loans they owe. However, not all debts they have obtained may be discharged. The debtor receives a discharge after they have complied with all the regulations and terms of chapter 13 confirmed by the court.

Loan Lawyers – A Reliable Team of Attorneys for Assistance in Bankruptcy Matters

At Loan Lawyers, we have served various clients seeking bankruptcy assistance. A professional and experienced team of attorneys is at the helm of dealing with complex bankruptcy cases. Right from making the right selection when it comes to bankruptcy options to assistance during the filing and forming the repayment plan process, we have got you covered. Contact us now to know more about our services or to book a free consultation.

Author Bio:

This post was written by Loan Lawyers. Loan Lawyers is a team of experienced and aggressive consumer rights litigation and trial attorneys in South Florida helping clients throughout the state of Florida.


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