What happens (and when) once you have filed for a Chapter 13 Bankruptcy?

Credit Counseling

While it may seem like something that’s too late to be of value, before you file you must complete an approved credit counseling course. When you file, you’ll need to present a certificate of completion, as well as a copy of any debt repayment plan that came out of the counseling process.

The Petition

Your case begins with the filing of a petition, which will include a schedule of assets and liabilities and other information. In addition, along with the counseling information above, you’ll need to submit:

  • Proof of income (usually recent pay stubs, unless you’re self employed)
  • A transcript of your most recent federal income tax return (you’ll also need to provide returns filed after your case begins).
  • A statement of any interest you have in a federal or state qualified education or tuition account.
  • A proposed repayment plan. This plan, which must be approved by the court, sets forth how much you believe you can afford to pay (through the bankruptcy trustee). to your unsecured creditors. Because the plan satisfy certain minimum requirements, the guidance of an experienced bankruptcy lawyer is especially valuable here.
  • A $235 case filing fee and a $75 miscellaneous administrative fee are due at the time of filing, though you can request approval to pay these in installments.

The Automatic Stay

One your petition and all the required accompanying documents are filed, the Bankruptcy Code’s “automatic stay” becomes effective. It’s “automatic” because it take effect without any further action on your part being required. Each of your creditors will receive notice of your filing. Subject to a few limited exceptions, once this happens, a creditor must immediately refrain from any further effort to collect your debt. This includes everything from collection calls and letters to filing suit to repossessing your car or foreclosing on your home. A creditor is considered to be on notice as soon as it receives the trustee’s letter, and many creditors have paid significant financial sanctions because they failed to promptly alert their collection departments or lawyers to a borrower’s bankruptcy filing.

Your First Plan Payment

This is ordinarily due one month after your petition is filed, even though your repayment plan may not yet have been approved.

What is The Creditors’ Meeting? Read on here.