Chapter 13 bankruptcy is considered as a safer form of bankruptcy which is suitable for debtors who wish to pay off their financial obligations if they are provided with necessary time. It allows individuals who have reliable incomes to pay all or a portion of their debts under protection and supervision of the court. In Chapter 13, the debtor will be permitted to keep all his/her assets while paying off the creditors according to the approved repayment plan.
Any financially troubled individual with regular income is eligible to file for bankruptcy under Chapter 13. Before filing for Chapter 13 bankruptcy, that person should undergo credit counseling through an approved credit counseling agency. According to sections 109(g), 362(d) and (e) of Title 11 of the US Code, during 180 days preceding filing, if a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after the creditors sought relief from the bankruptcy court to recover property upon which they hold liens, an individual will not be permitted to file under Chapter 13.
For filing under Chapter 13, a debtor should furnish before the bankruptcy court, all the relevant documents to show that s/he is unable to make payments to the creditors. Along with the petition, the debtor should also file a repayment plan. The debtor should compile and furnish information regarding creditors, amounts, nature of claims, source of debtor’s income, amount of debtor’s income, list of all of the debtor’s property, debtor’s living expenses including expenses related to food, clothing, shelter, utilities, taxes, medicine, transportation, etc. With regard to married couple, in instances where only one spouse files, the non-filing spouse’s income and expenditure is also required for the court, trustee and creditors to evaluate the household’s financial position.
To sum up, the debtor should file a statement of assets and liabilities, statement of present income and expenditures, statement of executory contracts, statement of unexpired leases, statement of financial affairs, certificate of credit counseling, copy of debt repayment plan, Evidence of payment from employees, if any, received 60 days prior to the filing date; statement of monthly income; statement of anticipated increase in income or expenditure after filing; and record of any interest in qualified education or tuition accounts.
Once a Chapter 13 petition has been filed, a trustee will be appointed. It is the duty of the trustee to administer the case and ensure that the creditors are paid off. The trustee collects all the monies from the petitioner and repays the creditors. The debtor has to provide the trustee with a copy of most recent tax returns, tax returns filed during the case and tax returns for prior years that had not been filed when the case began. A married couple may either file a joint petition or separate individual petitions. The case filing fee of $235 and the miscellaneous administrative fee of $39 is to be paid to the clerk of the court upon filing the petition. The case filing fee and miscellaneous administrative fee shall be paid in installments.