Understanding what you are getting into when filing for Chapter 13 bankruptcy is essential. The case begins when you file a lengthy set of bankruptcy forms and a plan outlining how you intend to pay creditors. You’ll also have a minimum of one meeting and one court hearing. If you properly prepare your case, the court will approve your plan, and you’ll pay your disposable income to the bankruptcy trustee monthly for three or five years. When the case is over, the court will erase the balance remaining on qualifying debts. While the steps might seem simple, getting the details right is challenging. Most bankruptcy courts strongly advise hiring a bankruptcy attorney to help navigate the Chapter 13 process. Here’s what you can expect in a typical Chapter 13 from start to finish. In This ArticleComplete a Credit Counseling CoursePrepare and File the Chapter 13 Petition and PlanAttend the Meeting of CreditorsAttend the Confirmation HearingFile or Object to Proofs of ClaimComplete Plan Payments and Financial Management ClassReceive the Debt DischargeComplete a Credit Counseling Course Within the six months before filing for Chapter 13 bankruptcy, you must take a credit counseling course from an agency approved by the U.S. Trustee’s office unless you fall within an exception. The list of approved agencies is on the U.S. Trustee’s website. Click “Credit Counseling & Debtor Education” to see the list. Prepare and File the Chapter 13 Petition and Plan You must complete a set of bankruptcy forms, including the bankruptcy petition, schedules, and other required forms on which you disclose all property, debts, income, and property transfers. You must also draft and submit a proposed Chapter 13 repayment plan. The repayment plan is the crux of your Chapter 13 case. Drafting the plan is complicated because it must meet multiple legal requirements, and it’s because of these difficulties many Chapter 13 filers hire a bankruptcy attorney. If you like shortcuts, try determining how much you’d pay using a Chapter 13 payment calculator. Once you file your papers, bankruptcy’s automatic stay goes into effect. The automatic stay prohibits most creditors from continuing with collection actions, although some exceptions exist. The bankruptcy court sends creditors a notice alerting them to the case and automatic stay. Attend the Meeting of Creditors The bankruptcy court will appoint the Chapter 13 trustee shortly after you file your case. The trustee reviews your filings and plan for legal compliance, objects to the plan confirmation when necessary, evaluates proof of claim forms filed by creditors, and collects and distributes monthly payments. The trustee also conducts the “meeting of creditors” or “341 hearing,” at which the trustee asks questions about your papers and finances. Creditors can also ask questions. Even though the bankruptcy court won’t yet have confirmed your plan, you must begin making payments about one month after you file your papers. Making payments early during the process ensures the case ends within three or five years. Attend the Confirmation Hearing You or your attorney must go to one court hearing before a bankruptcy judge called the “confirmation hearing.” If a creditor or the trustee files a plan objection with the court, the judge will decide the outcome after allowing each side to present their position. The court will “confirm” or approve your plan if changes aren’t necessary. Otherwise, you'll likely be given time to fix any problems. File or Object to Proofs of Claim Creditors must file proof of claim forms with the court to be paid from the monthly payments. You can object to inaccurate proof of claims or, if necessary, file one on behalf of a creditor so the trustee pays the debt as part of your case. Complete Plan Payments and Financial Management Class You’ll make plan payments during the repayment period and submit required documents, like income tax returns. You must also complete a debtor education class before the end of the case. This course is separate from the credit counseling required before bankruptcy. Receive the Debt Discharge When the repayment period ends, the court will grant a discharge, eliminating any remaining balances on qualifying debt. The court might hold a discharge hearing or mail you the notice without holding a hearing.
