A Chapter 13 bankruptcy reorganizes your debt by allowing you to pay creditors some or all of what you owe through a three- to five-year repayment plan. The Chapter 13 bankruptcy trustee appointed to your case oversees the plan's administration.
Some of the many duties performed by the trustee include:
If you're new to bankruptcy, here are some tips to help you survive your Chapter 13 case.
Most bankruptcy filers rarely see a bankruptcy judge during the case. Instead, you'll interact with the Chapter 13 bankruptcy trustee appointed to the case. The bankruptcy trustee is responsible for ensuring you qualify, so you can expect the trustee to:
The petition and schedules include information about your income, monthly expenses, assets, and debts. The trustee will use your tax returns, paycheck stubs, bank statements, and other items your particular trustee will require you to submit to confirm your financial disclosures.
Your proposed repayment plan outlines how you intend to repay your creditors some or all of what you owe. One of the trustee's tasks is ensuring that your Chapter 13 repayment plan is fair to your creditors.
If the trustee finds a problem with your plan, the trustee will likely bring it up at the meeting of creditors and attempt to resolve the issue informally. If you can't reach a consensus, the trustee will file a motion with the bankruptcy court asking for a resolution.
Your creditors can also object to your plan by filing a motion. In either case, you'll have an opportunity to respond to the motion before the judge decides the issue.
About a month after filing your case, you'll attend a Chapter 13 meeting of creditors. At the hearing, you'll present identification proving you're the person who filed the petition. If the meeting is virtual, you'll likely provide a day or two before the hearing.
During the hearing, you'll answer the trustee's questions under oath about the information in your bankruptcy paperwork, supporting documents, and plan.
You can expect the trustee to ask whether all of the information in your petition is accurate, whether you think you'll receive additional assets shortly, and any other information relevant to your bankruptcy. Your creditors will also have an opportunity to ask questions.
The trustee will continue the meeting to another date if more documentation is needed. Otherwise, the trustee will conclude the meeting. Find out what happens after the Chapter 13 meeting of creditors.
The trustee will attend the confirmation hearing and tell the judge whether the trustee believes the plan is feasible and meets all requirements. The judge will decide whether to "confirm" or approve the plan. If the plan is faulty in some manner, you'll likely be given time to correct the issue.
Within 30 days of filing your Chapter 13 case, you must begin sending monthly payments to the bankruptcy trustee according to your proposed plan. Until the court approves your repayment plan, it remains proposed, and the trustee holds the funds in trust for your creditors.
After court approval, the Chapter 13 trustee begins distributing the funds to your creditors under the plan terms. If the court doesn't approve the plan, you'll receive the funds paid to the trustee with a few exceptions.
During the three to five years it takes to complete a Chapter 13 plan, the trustee will forward payments to your creditors.
Creditors who want to receive Chapter 13 funds must file a proof of claim with the court within 70 days of filing (government creditors have 180 days). The proof of claim states the amount owed to the creditor and includes documentation in the form of a contract or agreement.
The Chapter 13 trustee reviews the creditor claims and objects to any improperly filed claims or claims lacking the correct documentation. Other parties can object, as well. Learn more by reading Objecting to a Proof of Claim in Bankruptcy.
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