How Does Chapter 13 Bankruptcy Work?
How does Chapter 13 Bankruptcy work? Here it is, in a thirteen-step nutshell:
1. Chat: You meet for a chat with your San Diego Bankruptcy Attorney (yours truly). Consultation is free of charge, pain free (you’re working with down to earth folks here), and it’s a first beg step to financial recovery. At your meeting, we tell you how it is. If Chapter 13 Bankruptcy is your best option, then we hit the ground running. If not, then we’ll tell you so or suggest Chapter 7 Bankruptcy.
2. Retainer: Once retained, we are here for YOU. We respond immediately to any question, big or small. We’re charged with representing your rights and ensuring a successful outcome. Creditor calls bugging you? No problem. Give em our number. Our clients’ matters are seen through–start to successful finish–by the same attorney you meet on day one.
3. What’s up, Docs? And then we assign you… homework. That’s right. We need some documentation (tax returns, pay advices, payoff statements). No biggie.
4. School’s NOT Out for Summer: When ready, you complete a little online “Credit Counseling Course” that takes an hour or so. It’s a standard bankruptcy requirement.
5. Petition Draft and Filing: Based on analysis of materials and info you provide, we then draft your bankruptcy petition and your chapter 13 plan (which states the amount of your monthly payment). Upon your approval, we file our fat stack of paperwork with the San Diego Bankruptcy Court. The chapter 13 bankruptcy plan provides for 36 to 60 monthly payments that generally total a small fraction of your debt. When the chapter 13 plan’s done, the remaining unpaid balance gets canceled (discharged or forgiven).
6. After Filing: once we file your chapter 13 bankruptcy case, an Automatic Stay goes into effect: we have the Bankruptcy Court order a stay or stop on all your collections, repossessions and foreclosures. Breathe a sigh of relief.
7. Payments: within a month after filing, you need to start making monthly payments in the amount stated in the chapter 13 plan. These are paid to a chapter 13 bankruptcy trustee, who’s tasked with distributing payments among your creditors.
8. Lien Strip (not a skinny burlesque): If we are doing a lien strip in your chapter 13 bankruptcy (removing a second mortgage), then your San Diego Bankruptcy Attorney will file the appropriate motion with the Bankruptcy Court and serve the second mortgagee (the holder of the note on the second mortgage); for Bankruptcy Code purposes, this service is made upon CEOs of relevant mortgage companies (though I’m afraid they don’t read what we so diligently provide them with).
9. School’s NOT Out Forever: After your chapter 13 bankruptcy is filed, you need to complete another online course– this one’s dubbed “Financial Management.” It takes an hour or two (shrug).
10. Get Together: About a month after filing your chapter 13 bankruptcy, a so-called Meeting of Creditors is held at a downtown San Diego office. Your bankruptcy attorney shall be there to represent you. This is a brief interview with a chapter 13 trustee (creditors themselves don’t show… go figure). The chapter 13 trustee will have you swear under oath that the information in the paperwork we’d filed is true and correct. Generally this meeting lasts all of a few minutes, with routine inquiries made into your rate of income and other financial affairs. This doesn’t merit any sweat (or nervous foot tapping). You’ll be fully prepared to address all questions.
11. Confirmation: the next step is to get your chapter 13 bankruptcy plan “Confirmed” or approved by the Bankruptcy Court. Confirmation means that the monthly payment amount in your chapter 13 plan gets finalized (which is a good thing). Often this process takes many moons and it’s your San Diego Bankruptcy Attorney’s job to ensure your chapter 13 plan is successfully confirmed. It takes a while because that’s the nature of the chapter 13 beast. We push hard for your best result and don’t settle for less.
12. Hashing it Out: So, how does confirmation get done? Consistent with your income and expenses, it’s the chapter 13 trustee’s job to have you pay as much as possible into the plan. It’s your San Diego bankruptcy attorney’s job to ensure you only pay what’s required. We work in earnest to resolve all objections (i.e. demands for higher payments) until your plan is successfully confirmed. If necessary, we’ll argue your case before the Bankruptcy Court. This is a routine process during which we keep you fully apprised. You needn’t fret during this “pre-confirmation” period; even though the chapter 13 plan is pending confirmation, you’re still under bankruptcy protection from all your creditors. Just maintain your monthly payments and we’ll address all objections, which may arise from the chapter 13 trustee or your friendly neighborhood creditor.
13. In the End: At the end of your 36- to 60-month chapter 13 payment plan, you’ll receive your order of discharge from the bankruptcy court. This means that the unpaid balances on your unsecured debts are forgiven. Exceptions apply to cancellation of debt.