What To Expect In A Chapter 13 Bankruptcy
Filing for bankruptcy is a big step. It is likely you have questions and lingering uncertainties about whether bankruptcy is right for you, and if so, what type of bankruptcy you can file. Most people are unaware of what to expect in a Chapter 13 bankruptcy. With that in mind, below we have laid out the procedures and costs associated with a Chapter 13 bankruptcy. If you have further questions or would like to schedule a free initial consultation to discuss your individual circumstances and goals, call us at 718-625-0800.
The Chapter 13 Bankruptcy Process
Prior to our preparing your bankruptcy petition, you must complete the first required class, which is called Debtor Counseling. It may be taken either over the internet or by telephone. The class is also offered in Spanish.
Once you have completed that class, we will prepare your petition and file it with the Court. The moment that we file your bankruptcy petition with the Court, an automatic stay will be issued that will stop your creditors from taking any collection and legal actions against you. As a result, if your house is being foreclosed, your wages are being garnished, or your bank accounts have been frozen, the creditors must stop all such actions. If any money is taken from you after we file your petition, the money must be returned to you.
Once we file your petition, you must begin making your payments under the proposed Chapter 13 payment plan. If you have secured loans, such as for your home or car, you must also make the regular payments as required by those loans.
Once your petition is filed, you must take your second required class, which is called Personal Financial Management. You must complete this class before the completion of your Chapter 13 plan. Again, this class may be taken over the internet or by phone and is also offered in Spanish.
The Meeting of Creditors will take place about one month after the filing of the petition. The meeting is known as a 341 hearing, because the hearing is called for under section 341 of the Bankruptcy Code. This hearing, during which you will be questioned by the bankruptcy trustee, has three basic purposes. The first purpose is to determine whether you have committed fraud. The second is to determine what assets you have. The third purpose is to determine whether your Chapter 13 payment plan is realistic, which involves mostly whether you can afford to make the payments. Typically, the hearing will last approximately 15 minutes.
We will prepare you for the questions that will be asked and will be at your side during the hearing. If the bankruptcy trustee is satisfied and has no further questions, he or she will "close" the meeting. However, if the bankruptcy trustee has further questions, a second hearing will be scheduled to occur approximately two weeks later. We will accompany you to that hearing as well.
After the Meeting of Creditors, the Confirmation Hearing will be held, at which, if the bankruptcy trustee and the bankruptcy judge are satisfied with your proposed payment plan, it will be approved.
You will continue to make your monthly payments to the bankruptcy trustee. Once you have completed all of your payments under the plan, you will receive a discharge. The discharge, along with your bankruptcy petition, will be proof that you are no longer responsible for your discharged debts. You should hold on to those documents for at least the next 10 years.
Chapter 13 Costs and Fees
During our free consultation, we will review your situation and advise you of your options and of our fees. Our fee for the typical Chapter 13 Bankruptcy is $4,900. This amount includes the court fee, credit report, and two required online classes. It is possible that a portion of our legal fee can be paid in the Chapter 13 Bankruptcy Plan. The exact amount of our fee will depend upon the following factors:
- Whether you have previously filed for a Chapter 13 Bankruptcy
- How much you owe
- The types of debts
- The type of property you have
- Whether you are self-employed
- Whether you are filing with your spouse.
In addition to our legal fee, you must pay $310 for the court filing fee and $40 for a credit report (combined from all three major credit reporting agencies), and $20 for the two required classes discussed below. During our free consultation, we will tell you exactly what the Chapter 13 Bankruptcy will cost.
If you wish to retain our office with regard to a Chapter 13 Bankruptcy, you must sign a retainer agreement and pay a deposit, also known as a retainer fee, of at least $500. We will provide you with written instructions regarding the information and documents that you will be required to provide. Once you have retained our law office, you may tell your creditors that they must call us and not you. If you prefer, we can call your creditors for you. After your first payment, you must pay us at least $500 per month until the balance of our fee that is not being paid in the Chapter 13 payment plan is paid in full.
Schedule your Free Initial Consultation Today
Call Jeffrey B. Peltz, P.C., at 718-625-0800 or reach us online here to get a no-cost consultation to discuss your next steps in protecting your financial future.