How to File for Chapter 13 Bankruptcy

Learn what it takes to successfully file a Chapter 13 bankruptcy.

By , Attorney

1. Make sure Chapter 13 is the right choice.
Most individuals choose between Chapter 7 and Chapter 13 bankruptcy. Both have unique features that help filers solve particular problems. For instance, in a Chapter 13 bankruptcy, you can catch up on missed mortgage or auto loan payments and prevent a home foreclosure or car repossession. Chapter 7 bankruptcy doesn't have a similar option. For more details, see When Chapter 13 Bankruptcy Is Better Than Chapter 7 Bankruptcy.

2. Analyze your debt.
If your debts are too high, you might be not eligible. Chapter 13 has limits on the dollar amount of debt you can owe. Also, some debts, such as certain tax, mortgage, and domestic support arrearages, must be paid in full over the course of the three- to five-year repayment plan. If you don't have enough income to make the required payment, it's possible that you might not be able to propose a feasible plan. See Are You Eligible for Chapter 13 Bankruptcy?

3. Value your property.
Before you file, you'll need to know how much property you own and how much of it you can protect using bankruptcy exemptions. Although you can keep all property, you must pay certain creditors an amount equal to the value of your nonexempt property. You'll factor the nonexempt property value into the amount you'll pay in the Chapter 13 bankruptcy plan.

4. Gauge your income.
Your income must cover your monthly living expenses, all of the debt you're required to pay in your plan, and the value of the nonexempt property you plan to keep. If you don't have enough income, the court won't let you proceed. See Your Obligations Under a Chapter 13 Bankruptcy Plan.

5. Fill out the bankruptcy forms.
Once you've determined that you qualify, you must enter all of your financial data on official bankruptcy forms and draft your repayment plan. (To learn more, see Completing the Bankruptcy Forms.)

6. Take the required pre-filing course.

Individuals who file for bankruptcy must take a credit counseling course beforehand. Once complete, you'll receive a certificate that you'll file with your bankruptcy paperwork. (You'll find more information in Credit Counseling & Debtor Education Requirements in Bankruptcy.)

7. File your forms and pay a fee.
When everything is checked and ready, it's time to file your forms, certificate, and plan with the bankruptcy court to get the process underway. You'll also pay the bankruptcy filing fee.

8. Provide the trustee with documents proving your income and other assets.

The information provided in your official paperwork is verified against bank statements, paycheck stubs, tax returns, amongst other things, that you'll produce after you file (called 521 documents).

9. Attend two hearings.
Within a few weeks after you file, you'll meet with the bankruptcy trustee appointed to administer your case at the 341 meeting of creditors. The trustee will review your identification, official forms, repayment plan, and supporting documentation. Creditors can also attend this meeting to ask questions (but rarely do). Shortly after this meeting, you or your attorney will attend a confirmation hearing at which the bankruptcy judge will decide whether to approve (confirm) your plan. Beforehand, a creditor can object by filing an opposition with the court. After reviewing written objections and considering any arguments presented at the hearing, the judge will decide whether to confirm the plan. (To learn more about the hearings, see Bankruptcy Procedures.)

10. Make payments.
You must start to make payments according to your repayment plan within 30 days. If you miss payments, the court will dismiss your case.

11. Take the post-filing course.

Sometime before completing your repayment plan, you'll want to take the second required class—the debtor education course—and file the certificate.

12. Get your bankruptcy discharge.
After completing your plan, you'll get your bankruptcy discharge. The discharge relieves you of the obligation to pay any unpaid balance on qualifying unsecured debts (some unsecured debts, such as student loan balances, won't be discharged). As long as you've paid the amount you promised in the plan, you're done. Congratulations!

You can expect to follow all of these steps; however, it's common for situations to arise that will require you to return to court. For instance, if your income drops, you might be able to ask the court to reduce your payment (but not always). You can learn more by reviewing The Chapter 13 Repayment Plan.

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