Chapter 13 Frequently Asked Questions

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Below we have provided answers to many of the common questions that we are asked by our clients regarding Chapter 13. If you would like more information please do not hesitate to call us at 508.655.5980 or e-mail us.

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy involves the repayment of all or part of the debts of an individual with regular income. Chapter 13 is designed for individuals with regular income who desire to pay their debts in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

Under Chapter 13, you must file with the Bankruptcy Court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three (3) to five (5) years, depending on your income and other factors. The court must approve your plan before it can take effect.

Generally speaking, a Chapter 13 is often filed:

1. To stop foreclosure and cure mortgage arrears,
2. If the debtor is over the means test limit for a Chapter 7 case;
3. To pay tax debt;
4. To protect property and avoid a Chapter 7 Trustee sale of assets;
5. To sell property to maximize price, and
6. To avoid dischargability problems with creditors (although the 2005 changes to the Bankruptcy Code have reduced Chapter 13 filing's ability to avoid dischargability problems).

What is the purpose of a Chapter 13 Bankruptcy filing?

The purpose of filing a Chapter 13 case is to obtain a discharge of the unpaid portion of your debts following the conclusion of the repayment plan, provided that you have complied with the plan and made all payments required under the plan. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the Court may deny your discharge and, if it does, the purpose for which you filed bankruptcy will be defeated.

What kinds of debts are not discharged in Chapter 13 Bankruptcy?

Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel or aircraft while intoxicated on alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.

How much does it cost to file for Chapter 13 Bankruptcy?

The Bankruptcy Court charges the following fees to file for Chapter 13 Bankruptcy:

Filing Fee of $235.00, plus
Administrative Fee of $46.00, plus
TOTAL CHAPTER 13 FILING FEE: $281.00

IMPORTANT NOTE: The above fees are in addition to any attorney's fees and/or fees for the preparation of the Bankruptcy Documents, appearance at a Section 341 Creditor's Meeting, or representation in Bankruptcy Court. Any fees for legal services must be agreed to in writing between you and your attorney prior to the commencement of any bankruptcy proceeding.

Can I File Bankruptcy Even If I Have Filed Before?

Whether or not you may re-file (and the amount of time that must pass before you may file bankruptcy again) depends on what chapter of the Bankruptcy Code you are filing under, what chapter of the Bankruptcy Code you previously filed under, and whether or not you received a discharge under your most recent bankruptcy filing.

You are not eligible for a discharge under Chapter 13 of the United States Bankruptcy Code if you have previously received a discharge under Chapter 7, or Chapter 11 of the Bankruptcy Code within the four-year period immediately preceding your planned filing. If you have received a discharge under Chapter 13 of the Bankruptcy Code, you may not obtain a discharge under Chapter 13 for two years after the previous Chapter 13 discharge.

If you received a discharge under a Chapter 13 bankruptcy case filed within the previous six years, you will be eligible for a discharge under Chapter 7 (and may therefore file a Chapter 7 petition) if, in the prior case, you paid at least 70 percent of your allowed unsecured claims, and your plan was proposed in good faith and represented your best effort to pay.

You are ineligible for a discharge under Chapter 7 (and therefore should not file) until eight years have passed from the discharge date obtained under a previous Chapter 7 filing.

If within 180 days before your bankruptcy you had a prior bankruptcy case that was dismissed because you failed to obey court orders or you voluntarily requested a dismissal (but did not obtain a discharge), then you may not file your bankruptcy case until this 180-day period expires.

Can A Court Deny My Discharge In A Chapter 13 Bankruptcy Case?

If you have tried to delay or defraud your creditors by transferring, hiding, or destroying your property within the 1-year period prior to filing a petition under Chapter 13 of the bankruptcy code, the Court may deny your discharge and, in its discretion, allow your creditors to recover any property transferred in the one year period.

Do I Need to Take a Credit Counseling Course Before I Can File for Chapter 13 Bankruptcy?

Yes. You must take a court-approved credit counseling course no more than 180 days before your bankruptcy filing. For more information on how to locate an approved credit counseling agency, contact us for a 1-hour initial consultation.

What Happens Immediately After I File My Chapter 13 Bankruptcy?

Your case is formally commenced when you file your bankruptcy petition with the Massachusetts Bankruptcy Court, which is part of the United States District Court - District of Massachusetts. As soon as you file your petition, the court will enter an Automatic Stay Order prohibiting your creditors from taking or continuing any collection or legal action against you.

Within 7 to 10 days after filing your petition, the Court will mail the Notice of Commencement of Case to you and to all of the creditors listed in your petition. This notice will inform you of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you.

The bankruptcy court will assign a bankruptcy trustee to oversee your case. The trustee is a federal employee appointed by the court to monitor your case and make sure you are eligible for bankruptcy. The trustee will review your petition, make sure that it is complete, and then schedule a meeting of your creditors.

What Do I Need To File With My Bankruptcy Petition? Are There Any Deadlines?

The bankruptcy court is very strict regarding deadlines. Often, missing a deadline will result in the dismissal of your Bankruptcy Case. Therefore, it is very important that all documents are filed accurately and on time with the Bankruptcy Court.

No more than 15 days after filing the Chapter 13 petition, you must file all required financial schedules with the court. The Schedules are documents declaring your assets, liabilities, expenses, income, and a statement of your financial affairs, which is very similar to a budget sheet or an explanation of your personal finances. In most cases, these schedules are filed along with your petition. The schedules also set forth to the trustee and bankruptcy court what property is "exempt" (meaning you can retain the property following the conclusion of your case) and what property is "non-exempt", meaning it must be surrendered to the trustee for sale, with the proceeds used to pay any debts.

Within 15 days of filing the Chapter 13 petition, you must file your Chapter 13 repayment plan. The repayment plan is a schedule of how much of your remaining available monthly income (as determined by IRS figures) is available to repay creditors, in what amounts, and in what order. Your Chapter 13 attorney will assist you in preparing your repayment plan, determining the available monthly income, and the proper repayment schedule.

Within 30 days after filing the Chapter 13 Repayment Plan, you must make your first payment as set forth in the plan to the U.S. Trustee. Failing to make the first payment will result in the dismissal of your Chapter 13 petition.

What Happens After My Case is Filed? Do I Need to Go to Court?

The court will hold the Meeting of Your Creditors (often referred to as a §341(a) Creditor's Meeting, in reference to the section of the Bankruptcy Code requiring such a meeting) about 30 to 45 days after your bankruptcy petition is filed. At least seven days before this meeting, you are required to provide to the trustee and any creditor requesting it a copy of your most recently filed tax returns and proof of income for the most recent 90-day period.

The court-appointed Chapter 13 trustee will preside over this meeting. At the meeting, which you are required to attend, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend (or formally reschedule) the meeting, your case will be dismissed.

Within 30 days after the first scheduled §341(a) Meeting of Creditors, the bankruptcy trustee and your creditors may object to some or all of your exemption claims, if appropriate.

No more than 90 days after the §341(a) Meeting of Your Creditors, all creditors (with the exception of government entities) must file proofs of claim (documents creditors submit to the court specifying how much is owed) within 90 days after the first date set for your creditor meeting if they wish to share in the payments from your case.

Following the §341(a) meeting, and at any time prior to the debtor's completion of the Chapter 13 repayment plan, the debtor must complete an approved financial management course concerning personal financial management. This course requirement is separate from, and in addition to, the credit counseling course taken prior to the filing of your petition.

Can My Creditors Object to the Discharge Of My Debts? Can My Discharge Be Denied?

A creditor may object to the discharge of amounts owed to them by the debtor under certain circumstances. If a creditor objects to the discharge of any of the debts listed in your petition or schedules, such objection must be raised within 60 days after the first scheduled §341(a) Meeting of Creditors. Alternatively, the trustee must move to dismiss your case within the 60-day period following the §341(a) Meeting of Creditors if he or she finds that the granting of relief would be an abuse of the provisions of the U.S. Bankruptcy Code.

Under What Circumstances Can Creditors Object to the Discharge of a Debt?

A creditor may object to your request to discharge a debt if the debt was obtained or incurred as a result of fraud, embezzlement or larceny, or any willful or malicious injuries you have caused others. If the Creditor establishes by a preponderance of the evidence that the debt was obtained by any of the above means, the debt will be deemed non-dischargeable.

Additionally, creditors may object to the discharge of certain debts if you have concealed or destroyed any property or financial records; made any false statements in connection with incurring a debt or other financial obligation; withheld financial or other material information; failed to explain losses; failed to respond to material questions permitted under the Federal Rules of Bankruptcy Procedure; or if you were granted a discharge with respect to that debtor in a prior bankruptcy case filed within the last 6 years.

When Will I Receive My Discharge?

You will receive your Chapter 13 discharge upon completion of your Chapter 13 Repayment Plan, which is 3 to 5 years (depending on the plan), measured from the date of your first repayment. Upon completion of your repayment plan you can file a Motion requesting that the Court issue a discharge.



                   Click here to learn more about the typical timeline for a Chapter 13.