Q: Who is eligible for a Chapter 13 plan?
A: A debtor who has sufficient regular monthly income shall be eligible for Chapter 13 plan. Such an individual’s unsecured debts should be less than $360,475 and secured debts under $1,081,400. However, these amounts may be adjusted periodically to reflect changes in the consumer price index. An individual shall not be eligible to file for Chapter 13 plan if a prior bankruptcy petition was dismissed within 180 days before the second filing.
Q: What all debts will be paid off in a Chapter 13 plan?
A: In a Chapter 13 plan, you make all payments to the trustee. The trustee will have a specific payment plan. S/he will initially opt to pay priority debts including child support and alimony, employee wages, and tax obligations. The next preference will be secured debts such as mortgages and vehicle loans. Payments to unsecured creditors usually come third in the repayment plan.
Q: What is a creditors meeting?
A: Before confirmation by the court and after filing the bankruptcy petition, the debtor should attend a creditors meeting. In this creditors meeting, all the creditors or their representatives will be present. They will try to assess the debtor’s current financial situation and study the repayment plan. A creditor meeting is the platform where the creditors can accept or oppose debtor’s Chapter 13 plan.
Q: Who is a Chapter 13 trustee?
A: Chapter 13 trustee is a person who is appointed to look over a bankruptcy case. S/he basically represents the creditors. Chapter 13 trustee reviews a petitioner’s repayment plan and makes recommendations to the bankruptcy court regarding confirmation. It is the duty of the trustee to collect the money paid by the petitioner and distribute it to the creditors. The trustee administers the bankruptcy case until it is closed.
Q: What is community property?
A: Community property referrers to a property jointly owned by husband and wife. States such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin accept the system of community property. In these states, community property includes all property acquired during the marriage, other than a gift or inheritance. All these nine states have their own laws regarding community property.
Q: What is the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy?
A: Chapter 13 bankruptcy is the type of bankruptcy favorable to a person having regular monthly income. In this type of bankruptcy, the debtor’s real property will not be at stake. Upon confirmation, the debtor can pay off the creditors by making regular payments to the trustee according to the repayment plan. However, in Chapter 7 bankruptcy, all nonexempt property owned by the debtor will be sold, and the proceeds will be used to pay as many of the debtor’s debts as possible. The rest of the debts may be waived off.
Q: How long does it take to complete a Chapter 13 plan?
A: Usually, in a Chapter 13 repayment plan, the debtor is supposed to pay his/her creditors in full or part within three years. In certain circumstances, the repayment period may be extended up to five years.
Q: Can a debtor convert a Chapter 7 case to a Chapter 13 case?
A: A debtor who has petitioned for Chapter 7 bankruptcy can convert to Chapter 13 bankruptcy any time before closing of the case provided that the case was not previously converted to Chapter 7 bankruptcy from Chapter 13 bankruptcy.