Bankruptcy Law – Chapter 13 Bankruptcy – Chapter 13 Bankruptcy Procedures

Chapter 13 Bankruptcy Procedures

The procedure in a Chapter 13 is much like the one in a Chapter 7. Like a Chapter 7, the statements and schedules are filed, and a 341 hearing is held. The primary difference with a Chapter 13 is that the trustee’s job is not to collect non-exempt assets unless the debtor wishes to surrender them. Here, the trustee’s job is to assist the debtor by making recommendations or raising objections in order to get the Chapter 13 Plan confirmed.

If car payments are to be made and the Plan is not yet confirmed, the trustee will make adequate protection payments to the car lender, since the car is depreciating in value while time passes prior to confirmation.

Once the Plan is confirmed, it establishes a priority order in which the trustee will distribute the Plan payments. Administrative expenses are paid first. After administrative expenses, secured claims are paid, then the priority unsecured claims, and only after all these have been paid, the non-priority unsecured claims will follow.

An unsecured creditor can only be paid if it files a proof of claim, and a debtor or his or her attorney can object to the proofs of claim. This gives the debtor some flexibility in negotiating with creditors and restructuring some of the debt.

Preparing a Chapter 13 Plan and then making adjustments that come up during the course of the bankruptcy over the course of 3 to 5 years, depending on the debtor’s changes in circumstance is complex  and should not be done without an attorney.

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During our initial consultation, we will help you review your financial situation, assess your options and choose the best course of action for you and your family. To learn more, we encourage you to contact us to schedule an appointment. Please contact us online or call our offices in Phoenix or Cottonwood at 602-275-3238.