How Chapter 13 Bankruptcy Works in Queens and Brooklyn
Bankruptcy cases fall under the Bankruptcy Code, 11 U. S. C. Section 101, et seq. This is federal law. Notwithstanding, state and local laws intertwine with each and every bankruptcy case. Additionally, there are several differences between chapter 7 bankruptcy versus chapter 13 bankruptcy. In this article, we will take a look at how a chapter 13 bankruptcy case works if you’re in Queens or Brooklyn.
While each and every lawyer will have their own way of doing things, you can expect most cases to run as follows. The first step is review your general facts and circumstances to see whether bankruptcy might work for you. This often involves a conversation that includes what kinds of income your household has, what kinds of expenses, what kinds of assets you have, and what kinds of bills and liabilities you may have. This is critical, as bankruptcy has limitations as to what kinds of debts might be dischargeable, whether your income allows you to file bankruptcy without a presumption of abuse, and what kinds of assets might be exposed to be marshaled by the trustee in a case.
After this initial intake, and deciding that bankruptcy works for you, you will have to put together documents to get your petition and schedules ready. While every case requires different documents, below are some of the common documents you will need in most bankruptcy cases:
- tax returns for previous 4 years (required for chapter 13 cases)
- paystubs from previous 60 – 90 days
- bank account statements from any and all bank accounts from previous 6 months
- bills, collection letters, lawsuit documents, credit report
- a list of household expenses
- any titles to property (real estate, vehicles, etc)
- financing statements (mortgage statement, vehicle financing statement, etc)
- valuations of property, such as real estate, vehicles, jewelry
When someone files for bankruptcy, they have to take two budgeting and finance courses, one course before the case is filed (called credit counseling) and one course after the case is filed (called debtor education). Generally, while I am preparing a client’s petition and schedules, I will have them complete the first course. When the course is completed, and the petition and schedules are ready for review, the client will come back in to review, make any changes to the bankruptcy papers, sign the documents, and the case will be ready to be filed.
Once these documents are compiled, you will begin to work on the petition and schedules. This requires use of the official bankruptcy forms. The petition requires basic information, including names, addresses, what kind of case the bankruptcy is, estimated assets and liabilities, as well as signatures. The schedules are the forms where all of the financial information is included, including any and all interests in property, exemptions claimed, interests in assets, all the liabilities, and income and expense information, including the required means test.
Unlike in chapter 7 cases, which relies strictly on your petition and schedules, the cornerstone of chapter 13 cases is the chapter 13 plan. The chapter 13 plan is a document in which you will propose to pay back creditors some amount of money over either three years or five years. Whether your plan must be a 3 year plan or 5 year plan, as well as how much you have to pay in the plan, depends on your income, expenses, and the means test calculation of disposable income.
Once the case gets filed, the court will notify all interested parties of the case information, including the case number, who the trustee is (there are 2 trustees that handle the chapter 13 cases in Queens and Brooklyn), and when the meeting of creditors is. Generally, the meeting of creditors is about 30 days from the date of filing. At the meeting of creditors, the trustee assigned to your case will ask you questions about your circumstances to confirm the information in the petition and schedules, and to ensure that the chapter 13 case and plan is a case that can get to confirmation.
After the meeting of creditors, the next hearing is the confirmation hearing. To get your plan confirmed, you will have to work closely with the chapter 13 trustee’s office to make sure that all valid and timely filed proofs of claim are addressed properly in the chapter 13 plan. For instance, if you are filing chapter 13 to stop a foreclosure, is the plan properly treating any arrearage claim? How is the plan handling ongoing payments? Is there a request for loan modification? If a car that is being financed is paid off during the term of the plan, what happens to that extra money when it becomes available? The chapter 13 plan must answer questions like these and more to be confirmed. A chapter 13 plan shall be confirmed if it meets all the requirements of the law.
If all is in order with the chapter 13 plan, it will be confirmed. You will make your payments to the trustee and to other creditors, as per the plan, for the length of the plan. As is often the case, things come up during the plan (such as a debtor needing to buy a new car). Depending on the language of the plan, a debtor may often have to file a motion in court to get the relief that he or she needs.
If the plan is completed, any remaining balance of a dischargeable debt gets discharged. For instance, if you filed chapter 13 to discharge one credit card debt that was $10,000. If you paid that creditor $5,000 during the chapter 13 plan, and the plan was successfully completed, that $5,000 balance gets discharged.
A chapter 13 bankruptcy case is a great way of eliminating debts and obtaining a fresh start in your financial life, especially if you own property that cannot be exempt. There is information and documents that you will have to bring together to prepare your bankruptcy petition, schedules and the very important chapter 13 plan. Once the petition, schedules and plan are filed, you will have to appear at a meeting of creditors, where a trustee will ask you questions about your petition and the circumstances of the bankruptcy. After the meeting of creditors, you will have to work with the chapter 13 trustee office to get the plan confirmed. If you successfully complete the chapter 13 plan, any debts that are leftover are generally discharged.
If you live in Queens or Brooklyn, and you would like to learn more about how a chapter 13 bankruptcy can help you eliminate debt, stop a garnishment and obtain a financial fresh start, contact the Law Office of Richard Kistnen, (718) 738-2324. If you’re interested in filing for bankruptcy on your own, and want some guidance, then you may want to check out the Chapter 7 Bankruptcy Webinar that I will be hosting!