CHAPTER 13 BANKRUPTCY STOPS FORECLOSURE and reduces your debt based on a court-ordered bankruptcy repayment plan. In this economy, it has earned the popular nickname "Bankruptcy Loan Modification".
A Chapter 13 Bankruptcy case is much more intensive than a Chapter 7 bankruptcy case, and typically will last three to five years longer. Chapter 13 is much more "hands-on", and requires timely payments to a court approved Trustee. EZBankruptcyForms.com has outlined all the steps involved below, but it is strongly encouraged you consult a legal ebook for further guidance if you choose to FILE CHAPTER 13 BANKRUPTCY WITHOUT A LAWYER.
Whether you file with an attorney or not, you can expect to pay $281 in court filing fees and $60-$100 in online education costs.
HOW TO FILE CHAPTER 13 BANKRUPTCY: Preparation Before Filing
MAKE SURE CHAPTER 13 BANKRUPTCY MEETS YOUR GOALS: There are two different Chapters of Bankruptcy available for individuals, Chapter 7 and Chapter 13. Chapter 13 Bankruptcy is commonly used as a "Stop Foreclosure" bankruptcy by individuals who have been turned down for a Loan Modification by their bank and are looking to make up their payments through a court-approved "Bankruptcy Loan Modification". Chapter 13 is a good solution for people who need time to pay off certain debts and have enough income to meet the Chapter 13 requirements. Some borrowers do not pass the Chapter 7 MEANS TEST, and the repayment plan Chapter 13 provides is the only option.
Although a general rule is that if a debtor qualifies for Chapter 7 to discharge (eliminate) all his debts, that debtor would choose Chapter 7 over Chapter 13, the following reasons for filing Chapter 13 exist:
CHAPTER 13 BANKRUPTCY STOPS FORECLOSURE, provided can afford to make up missed payments over time.
Your INVESTMENT PROPERTY (not your residence) is worth less than what is owed. Chapter 13 allows you to "cram-down" the debt to the amount the property is worth.
On your PRIMARY RESIDENCE, you owe more on your 1st mortgage than the home is currently worth. In Chapter 13, you can turn your 2nd mortgage (and any subsequent mortgages) into unsecured debt, and reduce the 2nd mortgage (and subsequent mortgages) to a fraction of what is owed.
If you own a vehile purchased more than 2-1/2 years ago, you can "cram-down" the debt to the current value of the vehicle.
A tax obligation or student loan that cannot be discharged in bankruptcy can be paid off over time using Chapter 13.
A debtor who owns a retail business that would be ordered to shut down in Chapter 7 can continue to operate the business in Chapter 13.
Steps you must perform BY YOURSELF WHETHER HIRING A LAWYER OR NOT
Itemizing your assets and liabilities
Completing online education courses
Passing the "Means Test"
Filling out the paperwork online (lawyers have you use a software program similar to ours)
Attending your “Meeting of Creditors” (your lawyer WILL attend that meeting with you, but cannot speak on your behalf
Organizing your tax records, bank statements and recent paystubs
Make monthly payments to your Bankruptcy Trustee
Attend you "Confimation Hearing"
BANKRUPTCY WITHOUT A LAWYER PAPERWORK - Prepare in Advance. Find out current values of autos and homes that you own (even if you owe more than they are worth), your checking, savings, and retirement accounts, household items and jewelry (our software contains links that help you identify current values of cars, homes, etc). Pull a consumer credit report to find the names addresses of your creditors. You may have some debts that have been passed off to collectors, and you will need to list those debts for both the original creditor and the collection agency on your bankruptcy forms to cease collection activities from both parties. Error on the side of caution. If you see a debt on one agency, but not on the other two, include it on your bankruptcy paperwork later.
Obtain your Credit Counseling "Certificate of Completion" from one of the Bankruptcy Approved Credit Counseling Agencies. This is a no-fail online course that will typically cost $30-$50. You MUST include your certificate with your completed bankruptcy paperwork.
Complete your required bankruptcy paperwork (aka fill out the bankruptcy forms). This will prove to be your most time-consuming step. You can find the forms for free here: http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx.
If you choose to use those forms, this step will take around 30-40 HOURS. EZBankruptcyForms.com's bankruptcy software will cut this step down to a reasonable 4-5 hours.
File your completed Chapter 13 bankruptcy paperwork with your credit counseling certificate with the bankruptcy court at your local area mentioned in EZBankruptcyForms.com's Bankruptcy Court Locator. As of November 1, 2011, the court clerk will require a $281 payment by cash or money order.
You should receive a receipt with your case number, Bankrupty Judge name, Bankruptcy Trustee name, and court date for your "Meeting of Creditors" (about 40 days out). On this date, your "Automatic Bankruptcy Stay" begins. The automatic stay stops all collection efforts (including wage garnishment), all harassment, and all foreclosure actions (if you have a loan on a car or home, see the "Warnings" section below on how your creditors can file a motion to continue collecting on you). From this point forward, THERE IS NO TURNING BACK on your filing for bankruptcy (you can no longer change your mind). WARNING: While you will get a warning if you forgot to submit a file, the court will not warn you if your paperwork is inaccurate. If you fill out the forms using software, they CAN SEEM VERY STRAIGHTFORWARD, but also can be tedious. Don't "forget" to mention something like how you might want to keep your house, or the court will assume that you don't..
Specific problems using the free government bankruptcy forms
Long names like "Arnold Schwarzenneger and Maria Shriver" will not be able to be entered due to length.
The information you will enter will not carry over from page to page. Because of this, you will have to enter your name and case number separately on about 60 different pages and perform several muti-page mathematical calculations manually.
The free government forms have no explanation for the infomation requested, and you will have to research the meaning of several questions before you can answer them. EZBankruptcyForms.com will provide a simple explanation for each question for a fee well worth the price.
The government forms are posted in alphabetical order, with no explanation on where to start or which order to fill out the forms.
The government supplied forms DO NOT INCLUDE state exemption laws needed to cite the property that you want to keep, and most free internet sites have outdated information. EZBankruptcyForms.com bankruptcy software program has information updated as of the last federal change, November 1, 2011.
EZBankrputcyForms.com Bankruptcy Software vs. Lawyer
Bankruptcy Tutorial Provided
Complete forms by yourself, using auto-calculating software with Local Rules Included
Can prepare ENTIRELY from home
e-File available *
* Using our software, you can prepare your case entirely at home, but must physically go to your local bankruptcy court to file the paperwork. When using a lawyer, you submit the paperwork to him/her, and it is efiled from the attorney's office.
MAKE SURE YOU ARE HONEST! Don't try to pull a "fast one" on the Trustee -- while he/she may not be able to pinpoint the exact amount of pants you own, he/she is able to access a lot of your personal information once you file for bankruptcy (such as your bank accounts, car registrations and titles to homes), and can either make your life very easy, or very, very, hard.
AFTER YOU FILE FOR CHAPTER 13 BANKRUPTCY...
Make your first payment toward your proposed debt-repayment plan to the bankruptcy Trustee within 30 days of filing for Chapter 13 bankruptcy. On your original bankruptcy paperwork, you proposed a monthly repayment plan based on your "disposable income" calculated on the "CHAPTER 13 STATEMENT OF CURRENT MONTHLY INCOME" form. You must make that proposed monthly payment within 30 days of filing, EVEN BEFORE YOUR MEETING OF CREDITORS.
Respond to every correspondence your trustee sends you, or the court sends you, that require a response. GATHER YOUR LAST TWO BANK STATEMENTS, LAST TWO MONTH'S PAYSTUBS, LAST FOUR YEARS TAX FORMS AND ANY PAPERWORK ON REAL ESTATE YOU OWN. Your Bankruptcy Trustee will more-than-likely be asking for it on or before your "Meeting of Creditors" court date. If you forget to file one of the required forms, you will receive a written request from the court to submit the form in a timely manner or your case will be dismissed. All is not lost if you can correct an "honest mistake", and are able to submit it in a timely manner.
Attend your Meeting of Creditors court date. Be on time. YOU MUST ATTEND. This meeting will last about 15 minutes. The Trustee will ask some generic questions pertaining to your name, SSN, your understanding of the forms, and any errors or omissions. Answer truthfully all questions posed to you by the trustee. When the trustee is finished asking questions, any creditors who show up will have a chance to question you. Secured creditors will likely attend, especially if they have any objections to the plan you have proposed as part of your Chapter 13 filing. Come to the meeting prepared to negotiate with disgruntled creditors. If you agree to make changes to accommodate their objections, you must submit a modified plan. While the trustee won’t use the creditors’ meeting to rule on any objections raised by the creditors, the trustee may raise these objections on behalf of the creditors later, at your confirmation hearing before the judge.
Attend your Chapter 13 “CONFIRMATION HEARING” which will be held shortly after the creditors’ meeting in front of the bankruptcy judge, who will EITHER confirm (approve of) your proposed plan OR send you back to the drawing board for various reasons—usually because your plan doesn’t meet Chapter 13 requirements. (For example, a judge might reject your plan because you don’t have enough income to pay off your priority creditors in full while staying current on your secured debts, such as a car note or mortgage.)
You are entitled to amend your proposed plan until you get it right or the judge decides that it’s hopeless.
Each amendment requires a new confirmation hearing and appropriate written notice to your creditors. Once your plan is confirmed, it will govern your payments for the three- to five-year repayment period.
Keep making your monthly payments to the bankruptcy Trustee on time. You must do this in lieu of paying your creditors for as long as your Chapter 13 case is open (three to five years).
File annual income and expense reports with the bankruptcy court. You must file these or your case will be dismissed. This is a simple but necessary step.
Complete your post-filing Personal Financial Management Instruction Course. This is a different course from the credit counseling course you did when you submitted your paperwork. EZBankruptcyForms.com has included a list of Bankruptcy Approved Debtor Education Providers. Submit certificate of completion as instructed in the correspondence to you. WARNING:If you do not submit a Financial Management Course Certificate of Completion to the bankruptcy court within 45 days of your Meeting of Creditors, your case will be dismissed. WARNING:Your fee waiver for your Debtor Education course is separate from your bankruptcy court fee waiver and your Credit Counseling fee waiver, and must be submitted individually to the company supplying the course.
WAIT FOR FINAL CORRESPONDENCE SAYING YOUR DEBTS ARE DISCHARGED. If you have followed your above mentioned "payment plan", this should happen between three and five years after your case has been filed.