If you’re dealing with more debt than you can handle at once, the bankruptcy court can help. Chapter 13 is a way to take your current debt, and spread it out over a 36-60 month repayment plan. The Chapter 13 trustee guides and enforces this plan so you don’t have to worry about your creditors trying to change the plan, you deal only with the court itself. By the end of the term, you’re debt free and you get to keep your house, car, and other property.
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You must a credit counseling class before you are able to file a bankruptcy petition.
Filing the petition
The process begins with the filing of the petition for bankruptcy to the US Courts. The Court will appoint a Trustee to your case. The Trustee manages the case until the judge discharges the case. Part of your petition is your repayment plan.
Over the next 30-60 days there will be a 341 Meeting, which is where your debts and income are documented. Your creditors will be notified, but most don’t appear in person. You sit down with your attorney and the trustee. The purpose of this 341 meeting is to make sure you’re not committing fraud and that your plan will succeed.
Over the next 30-60 days, the Trustee will determine if they have any objections to the plan. During this period creditors may file their own objections as well.
The plan is modified to resolve objections filed by creditors or raised by the trustee.
The court will hold a confirmation hearing. This is where the plan is reviewed and the court will formally approve the plan.
For the next 36 to 60 months, you will adhere to the plan, making your monthly payments. There will be occasional reports on how the payment plan is progressing.
After your last payment, it’s over. You’ll simply receive a letter in the mail telling you’re your bankruptcy case has been discharged and closed. It’s a small letter, but you’ve made a huge amount of progress! Congratulations!
Over the next 24-36 months, you can rebuild your credit and put the past behind you!