Chapter 13 Plan: How Does It Work?

Bankruptcy is a government-provided means of eliminating debts that you cannot repay in order to get a fresh start, but there are different types of consumer bankruptcy.

Chapter 13 bankruptcy—also known as “reorganization bankruptcy,” does not involve liquidation, where your luxury possessions are repossessed or auctioned as repayment for your debts. Instead, Chapter 13 allows you to set up a plan with your creditors to repay as much as your debt as possible within a certain period of time (usually 3-5 years), after which your remaining, eligible debts are discharged.

The Steps of Chapter 13 Bankruptcy

  1. File a Petition – You will need to complete and file several different documents with the bankruptcy court. Married individuals can file a joint petition or separate petitions, depending on the situation. Having a Worcester bankruptcy lawyer to help you complete all the necessary paperwork is extremely helpful and highly recommended.
  2. Pay the Filing Fee – According to the US Courts website, the bankruptcy court must charge a $235 case filing fee and a $75 miscellaneous administrative fee. These fees can often be paid in installments with the court’s permission.
  3. Meeting of Creditors – Between 21 and 50 days after the petition is filed, your Chapter 13 trustee (every consumer who files Chapter 13 will be assigned one) must hold a meeting of creditors. The debtor will meet with their creditors at this meeting to ask or answer questions, and to present his or her proposed terms for their repayment plan. If everything is properly organized and completed ahead of time, this meeting is generally short and the plan is agreed upon by all parties.
  4. Confirmation Hearing – Once the creditors and debtor agree upon a Chapter 13 repayment plan, all who wish to attend will then go to court for a confirmation hearing. The plan will then be presented and confirmed.

Consult a Worcester Bankruptcy Lawyer to Learn more

The Law Offices of Robert W. Kovacs, Jr. can help you understand your bankruptcy options so that you can make an informed decision. With a Worcester bankruptcy attorney to guide you, you can find the financial freedom you’ve needed for so long. Contact the firm today!