Its Time To Start Over
The goal of bankruptcy is to eliminate your debt, so you can start your life over and get off to a good start. Secured debts such as a house or car are untouched, so you still have them. You also have to pay student loans.
Its time to begin again. We mentioned that credit card companies send you offers. When youre ready, choose one and use it to slowly rebuild your credit. Use the card sparingly and pay off the debt every month.
You also want to keep up with utility and other bills. The key to improving your credit score is incurring small amounts of debt and paying them on time. If you have a home or a car loan, then make sure its paid on or before the due date.
Late payments make your credit score decline. Its also important to not incur large amounts of debt in comparison to your income.
You should also get your credit report from all three credit bureaus: Experian, Equifax, and TransUnion. This way you can see what is on it, report any mistakes, and work to improve your score. You likely received the reports during the bankruptcy process, but its been several years since then.
If you make your payments on time and control the debt, then your credit score gradually increases after several months. When the bankruptcy finally leaves your credit report, expect a sudden bump in your credit score.
If The Confirmation Hearing Is Continued
The court may do this to allow you to finish dealing with matters affecting confirmation, have more time to work out agreements with your creditors or amend your plan to correct errors or resolve objections. It is not unusual for Chapter 13 confirmation hearings to be continued more than once as long as the court is convinced that you are using the time to resolve any problems and not just to delay the process.
Your Creditors Get Your Disposable Income
In Chapter 13 bankruptcy, you’re allowed to keep all of your property and repay your debt over a period of three to five years through a court-approved repayment plan.
You fund your plan with your “disposable income,” or the amount remaining after paying allowed monthly expenses. Because bankruptcy law assumes a reasonable lifestyle, not the filer’s actual lifestyle, you won’t be able to use all of your actual expenses. For instance, reasonable rent, food, and utility payments are predetermined according to your area. So most people must live frugally under a Chapter 13 plan.
Also, your disposable income is not static. The amount you’re expected to pay can change throughout your repayment period. For instance, if your income increases but your expenses stay the same, your disposable incomeand your plan paymentwill increase.
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What Happens At A Chapter 13 Confirmation Hearing
Most courts have a Chapter 13 day. On Chapter 13 day, the bankruptcy judge may try to resolve 50 to 100 Chapter 13 cases. You can imagine that with this kind of volume, things move quickly.;Most cases are resolved prior to the hearing. In such a case, the judge may read the name of the case and read what happened. For example, in #52, the Smith case, the matter is continued for 30 days.
There are a number of quick resolutions at the confirmation hearing. Many times the hearing is continued so that your attorney can provide additional information, amend the schedules, or amend the Chapter 13 plan. This is a common resolution in many courts.
Other courts allow us to have objections sustained. This means that we agree that the plan needs to be corrected and that were asking for time to amend it. We would normally say that the objections are sustained with an amended plan due in ___ days. 30, 60, or 90 day windows are common depending on the complexity of the case.
Can Your Bankruptcy Case Be Reopened
Even after your case is closed, the trustee, your creditors, or you can request that the court reopen your case. If the trustee or your creditors discover that you provided false information on your bankruptcy papers or didn’t disclose all of your property, they can ask the court to reopen your case in order to administer those assets or even revoke your discharge.
In some cases, you may also want to reopen your bankruptcy. For example, if you accidentally forgot to list a debt or if a creditor is violating your discharge, you might ask the court to reopen your case to address these issues.
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Chapter 13 Discharge Clears Qualified Debts
Congratulations, youve spent years slowly repaying your debts and the plan is now complete. The judge issues the discharge and now any remaining balances on your qualified debts are forgiven. Chapter 13 bankruptcy allows for more qualified debts than Chapter 7.
Traditionally, covered debts include non-priority unsecured debts such as credits cards, medical bills and non-secured loans. Chapter 13 expands this to include debt connected to damage you did to the property of another person with the object to cause damage.
It also includes taxes paid with a credit card and certain divorce property settlements. This does not include alimony or child support debt. If you owe fines, penalties, or forfeitures to the government, then they are cleared.
This doesnt include criminal fines or restitution. Other qualifying debts under Chapter 13 include debt due to a wrongful act against a bank, court fees for someone that files official documents, and security law violation debts.
Your discharge means any remaining debt is forgiven and creditors cannot go after you for it. If they do, then you should contact your bankruptcy lawyer. Youve made all your Chapter 13 bankruptcy payments and your debts are gone.
How Does Filing Bankruptcy Impact Credit
Your credit may not be in tip-top shape by the time you consider filing for bankruptcy, since high balances and missed payments are the top factors affecting your credit score. Still, the presence of a bankruptcy on your credit report will severely impact your credit scores and creditworthiness the entire time it is on your report. That impact will lessen as time passes, however. Chapter 7 bankruptcy remains on your report for up to 10 years, and Chapter 13 stays there for up to seven years.
It’s not an ideal credit situation, of course, but you can use the time to manage your debts wisely and make consistent on-time payments. Like with any damage to your creditworthiness, it’s possible to rebuild your credit with some focus and patiencealong with using the debt relief provided by the bankruptcy to get back on track financially.
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Success Rate For Chapter 13 Bankruptcy
Consumers should be aware that there is less ;than 50-50 chance filing for Chapter 13 bankruptcy will be successful, according to a study done by the American Bankruptcy Institute .
The ;ABI study for 2019, found that of the 283,313 cases filed under Chapter 13, only 114,624 ;were discharged , and 168,689 were dismissed . Thats a success rate of just 40.4%. People who tried representing themselves call Pro Se filing succeeded just 1.4% of the time.
Do I Go To The Chapter 13 Confirmation Hearing
In many cases, only attorneys attend the confirmation hearing; this can vary by court. Also, you might have to participate if other matters related to confirmation will be heard simultaneously or if the judge requires it. Creditors generally only attend the hearing through their attorney and only if there is a related matter pending which involves their particular claim or if they are objecting to your plan. If you are representing yourself, you must attend the confirmation hearing.
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Your Case Is Dismissed Or Converted To Chapter 7
The court can dismiss your case or convert it to a Chapter 7 if you aren’t making your payments under the proposed plan, if you don’t have sufficient income to fund the plan, or the plan doesn’t meet the requirements of the law. In Chapter 13, in most circumstances, you have the right to dismiss your case. As a result, the court will generally dismiss the case if you do not request that it be converted to a Chapter 7.
The End Of A Chapter 13 Reorganization Bankruptcy
If you have stuck to it, at the end of your repayment plan, all of your remaining debts that are eligible to be discharged will be wiped out by the bankruptcy court. However, before a court can discharge your debts, you must show the judge that you are current on all of your non-dischargeable debts and that you have completed a budget counseling course at an agency that is approved by the United State’s Trustee’s office.
Is Your Chapter 13 Case Close To Discharge Are You Almost Finished Making Payments Learn What Steps Youll Need To Complete Your Chapter 13 Plan Payment Next
Firstly, congratulations, youre almost done with your Chapter 13 plan payment and now your wondering what to do next?; Thats fine.; Weve heard this question on more than one occasion.; Once your ready and youve completed your payments, your assigned Chapter 13 trustee will complete an entire review of your Chapter 13 case. He or she will go through your case and ensure you have successfully satisfied all the requirements listed in your Order Confirming the Chapter 13 case.
If you are wondering where to find the Order confirming the Chapter 13 case feel free to contact your attorney or the U.S. Bankruptcy Court.; If you are one of our clients; feel free to contact us, we will be sure to point you in the right direction and give you anything you need to complete this portion of your case.
Once you have successfully complied with the Order Confirming the Chapter 13 case, your trustee will then file his or her report of the completed plan. This process may take up to 60-90 days, however, there have been cases that the process takes less time or more time.;; It just depends on the current caseload of the trustee, not that theyve;forgotten about you.
Filing A Chapter 7 Case Without An Attorney
If youâre struggling to pay your debts, you might want to consider a Chapter 7 case before you file a Chapter 13 case. Depending on your financial situation, you might pass the Means Test for a Chapter 7 case. In a typical no-asset Chapter 7 case, you can eliminate your debts within four to six months after filing your bankruptcy petition with the bankruptcy court. For many filers, theyâre able to get rid of thousands of dollars in debt quickly without losing any of their property.
If this sounds like the debt solution you have been searching for, consider using Upsolveâs free filing tool. If you have questions or you are skeptical, watch video testimonials from our past users. You can hear from actual individuals who used our services to file a Chapter 7 case without an attorney to receive the debt relief they need.
If you need a fresh start but you canât afford to pay an attorney to help you file a Chapter 7 bankruptcy case, take ourscreener to see if you’re a fit for Upsolveâs free bankruptcy app. Upsolve gives individuals who cannot afford to hire a bankruptcy attorney the assistance they need to get out of debt. You can do this!
Check out the video below â¬ï¸ for more on what happens when a Chapter 13 case is dismissed!
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If Youre Filing For Chapter 13 Bankruptcy A Chapter 13 Repayment Plan Could Be The Legal Tool That Puts You On A Clear Path Toward Getting Out Of Debt
The repayment plan is like a personalized road map for paying off some or all of your debts in a Chapter 13 bankruptcy, and it works somewhat like a short-term consolidation loan. The plan helps you to restructure your debts for one bimonthly or monthly payment based on a number of factors, including the total sum of your eligible debts, your household income and various potential deductions for items like cost-of-living expenses and required tax payments.
The plan is then submitted to the bankruptcy court for approval, at which time the judge and your creditors will have the chance to challenge it.
If your plan is approved and you make three to five years of regular payments according to the plan, some or all of your remaining debts may be discharged, and your debt picture could be much brighter.
Read on for more info on how a Chapter 13 repayment plan works, how to work through the forms and how to maximize your chances of following the plan during the repayment period.
How Does A Chapter 13 Payment Plan Work
Typically, with Chapter 13 bankruptcy in Los Angeles County, a 36-to-60-month payment plan is proposed to the court to repay your debt. A 36-month plan is proposed if your gross income is below the median income for your state. If your gross income is above the median income for your state, then a 60-month payment plan will be proposed.
Your Chapter 13 bankruptcy attorney will propose repayment terms to the court, which will include how much of the debt you can pay and how long it will take you to do so.
Your first payment is due 30 days after your bankruptcy case is approved by the court and filed. You will make a single payment to a trustee who will then distribute payments to your creditors.
The Chapter 13 Payment Plan
The hallmark of a Chapter 13 case is its payment plan. The payments last from 36 to 60 months and may include an amount that will go to unsecured creditors, past-due taxes, and past-due home mortgage amounts. It may even include car or house payments and some portion of your attorney fees. The payment plan is designed to:;
- Help make payment of unsecured debts like medical bills and credit cards more affordable and manageable.
- Provide a way to pay past-due house, car, income tax, child support, and alimony payments over time.
- Substitute for the need to sell or turn over the nonexempt property.
The types and amount of debt you owe determine what your payments will be, as well as your income and your reasonable and necessary expenses.;
Some flexibility can be built into payment plans and budgets to account for the unexpected, but it is difficult even for experienced bankruptcy attorneys and;Chapter 13 trustees;to account for everything that might happen.
You may not know for months after your case is filed if your proposed plan payments are acceptable to the Bankruptcy Court and the Chapter 13 Trustee. The trustee will verify your income and make sure your expenses are not too high. It takes several months for creditors to file claims and for all the players to review those claims. If you disagree with a claim, the bankruptcy judge may have to decide the dispute. This process can take several months to a year to complete.
Overview Chapter 13 Bankruptcy
Chapter 13 isnt about debt forgiveness, but a method for people with a regular income to pay back debts over time. The debtor creates a repayment plan and submits it to the creditors. The plan considers the income of the debtor, money for bills, and paying back creditors.
Many times, the amount offered to the creditors is less than what they want, but as its a bankruptcy, they take what they can get. If they dispute it, then it is something you work out with your bankruptcy attorney. The repayment plan is set for 3 to 5 years depending on various factors including the income of the debtor.
If not, the bankruptcy is formally discharged. There is also a hardship discharge if something happens that causes the debtor to no longer provide payments for the plan. There can be no modification of the repayment plan once its approved regardless of the debtors situation.
First 341 Meeting Of Creditors
Time: Approx. 30-40 days after filing
- The 341 meeting of creditors is an opportunity for creditors to ask questions of the debtor under oath.
- The trustee will ask some questions of the debtor and will investigate whether the schedules are correct and whether the plan is feasible.
- The meeting may be continued to another date for further questioning if the trustee needs additional information.
The bankruptcy rules require that the first Chapter 13 341 meetings be held no earlier than 21 days after filing and no later than 50 days after filing.
What Is A Chapter 13 Confirmation Hearing
A Chapter 13 confirmation hearing determines whether the bankruptcy judge approves your Chapter 13 Plan. At the hearing, the bankruptcy judge will determine if your plan meets the requirements of Chapter 13. Confirmation is a big step in the Chapter 13 process. Plan confirmation serves as a formal approval of your plan. It locks it in stone so-to-speak. This is a big milestone in Chapter 13 because you normally get certain privileges back when your plan is confirmed. You can start rebuilding your credit, for example. It also makes it easier to get a new car.
Lets discuss what happens at a Chapter 13 confirmation hearing.
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