You propose a plan to make a certain payment each month to a government-appointed officer called a trustee. The trustee will use that money to pay your creditors according to your repayment plan once it’s approved by the court. Most Chapter 13 plans last between 3-5 years. During that period, you and your property are protected by the federal court from creditors as long as you fulfill your obligations under the plan. Typically, a person who completes a plan as approved gets to keep his or her property and receive a discharge of the unpaid balance of most types of unsecured debt.
The Chapter 13 Bankruptcy Process
As in all bankruptcy cases, filing of a Chapter 13 case usually triggers immediate court protection known as the “automatic stay.” It means that most collection actions such as lawsuit, judgment, garnishment, foreclosure, repossession and harassment against the debtor must stop. Under certain circumstances, however, the stay may be limited or does not exist at all. In these cases, you absolutely need an experienced attorney to get into court and get the stay extended or imposed.
The court sends notices of the bankruptcy to all listed creditors. The case is assigned a federal judge and a bankruptcy trustee. The trustee’s primary job is to administer the repayment plan submitted by the debtor. In other words, to use the money paid by the debtor to pay creditors according to the plan.
Finishing Up and Filing Chapter 13 Bankruptcy
The debtor starts making the plan payment 30 days after filing of the bankruptcy petition. All debtors are required to attend a meeting of creditors. Creditors have the right to attend the meeting and ask the debtor questions, but they rarely show up. Typically, the debtor just meets with the trustee, who asks a few questions about the debtor’s debts, assets, income, expenses and financial affairs. The main purpose of the meeting is for the trustee to determine if the plan meets the requirements of the bankruptcy law. If you elect to hire us to represent you, we will be with you at this meeting.
The court then holds a confirmation hearing about four weeks after the creditor meeting, where the trustee makes a recommendation as to whether the plan should be confirmed (approved). Your creditors and trustee may object to the plan being confirmed and request that the automatic stay is modified to remove them from the bankruptcy protection. An experienced attorney knows how to deal with these objections and motions.
Once the plan is confirmed, the debtor simply continues to make payment as required by the plan, until it is completed, at which point the court will issues a discharge, if the debtor is eligible. Your plan is not set in stone, however. If your financial situation changes after the plan is confirmed, your plan may be modified to meet your new situation. Modification requires the plan to be completely recalculated and a motion with supporting evidence to be filed with the courts. Again, this is where you want an experienced attorney representing you.
You can also incur new credit while in a Chapter 13 bankruptcy, but you must get court approval to do so. The court must find that the credit is reasonable and necessary, so you need to have an experienced attorney to make that argument on your behalf.
Contact our offices online or call 312-853-0200 to speak with an experienced Illinois Chapter 13 bankruptcy lawyer. We are ready to help.