Chapter 13 bankruptcy has the advantage over other forms of bankruptcy claims in that it acts somewhat as if it were actually a consolidation loan. With the Chapter 13 type claim, the debtor can, in some instances, retain some of his property while paying off his creditors through the bankruptcy court instead of directly.
The process of a Chapter 13 Bankruptcy begins with the filing of the claim in the local region where the debtor lives. He must also provide all financial records such as assets and liabilities as well as a list of expenditures and their current net income. This is usually a minimum of the last six months before the filing date. The details of any unfinished leases or other contracts must be provided as well as the Federal P1007 Statement of Financial Affairs. It is also required that a person has gone through the process of credit counseling, and be able to provide a repayment plan before being able to file a Chapter 13 bankruptcy claim.
Other information that must be provided to the bankruptcy court trustee in order to qualify for a claim includes the past year’s tax returns and transcripts. There is the possibility that more than just the past year’s records will be required. This will also include all information on a person’s spouse as well, regardless of whether they are filing a joint or individual claim, or even if the spouse is involved in the individual’s Chapter 23 bankruptcy claim.
The filing fee, with very few exceptions, must be paid upon the filing of the claim. The Chapter 13 fee is currently $235 with an extra $39 miscellaneous fee to cover administrative charges. Few exceptions are allowed but the fee can be designed for payment over the course of four payments within 120 days maximum. A jointly filed bankruptcy claim requires only a single fee to be paid, although if spouses are filing separately they would then each be required to pay the filing fee in full.
Once the filing fee is paid, all the necessary forms have been completed, and all the lists, schedules and documentation is presented, the court will then assign a trustee administrator to oversee your claim. This individual will not only be the one to evaluate the Chapter 13 bankruptcy claim, they are also the agent who will collect your payments and will serve as your disbursement agent to get each creditor their cut of the payments made.
One of the greatest advantages of Chapter 13 is that it, by default, will prevent foreclosure proceedings against your home. It also prevents the majority of collection proceedings from being able to act against you on their own. Chapter 13 bankruptcy also has a section that protects third party debtors. This would prevent further collection action against an individual who had co-signed a loan or other “consumer debt”.
You will have to begin making monthly payments to your bankruptcy trustee within 30 days of filing even if the claim itself has not passed through the court and been approved. Once you have had your claim approved, maintain all your payments so that within three to five years you may begin to restore your good credit again.