Katz and Wulff Attorneys at Law

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as a “wage earner plan,” allows you to keep property by proposing a plan to pay certain creditors part or all of what is owed. Filing Chapter 13 bankruptcy has several important differences and benefits. Here’s how it works:

• We will file your petition with the court. Like Chapter 7, the petition will include schedules, statements and exhibits which explain your financial situation. Included in these schedules is a household budget showing how much disposable (left over) income you have available to pay your creditors. It will also contain a plan for repaying each type of creditor owed (taxes, car loans, mortgages, unsecured debts like credit cards and medical bills, child support, etc.).
• A trustee will be assigned to administer your case. Creditors will receive notice along with a “Proof of Claim” form to fill out and return to the court so that they can be paid through your plan.
  The notice will list the date, time and place of the Meeting of Creditors, which usually takes place about six weeks after the bankruptcy petition is filed.
• At the Meeting of Creditors the Chapter 13 trustee will review your petition and ask you any questions necessary to ensure that they are accurate and complete. Your lawyer will be with you to explain the process and answer any questions you may have. Creditors may also attend this meeting to ask questions of you, but very few do since they usually already know what they need to know.
• If you are employed, a “wage order” will be sent to your payroll department instructing them to set aside your Chapter 13 payments and send them to the Chapter 13 trustee. As creditors file their Proofs of Claim with the court, we will review them to make sure they are not being overpaid. Additionally, we will work with the Chapter 13 trustee and creditors on your behalf to obtain the court’s approval, or “confirmation” of your Chapter 13 plan.
• After the last plan payment has been made to the Trustee, the Court will issue an order discharging all remaining unsecured debts included in the bankruptcy, just like in Chapter 7.

What Can I Do in a Chapter 13 Debt Reorganization?

Unlike a Chapter 7 Bankruptcy, a Chapter 13 Debt Reorganization can help:

• Stop foreclosures on your house or mobile home and give you time to catch up payments.
• Help you to keep your car and other property, or force the return of repossessed property. Additionally, Chapter 13 often allows you to keep your property for less money than you would be able to in a Chapter 7 or outside of bankruptcy.

ONE FINAL NOTE: Chapter 13 is more expensive than Chapter 7. The main cost is attorney fees. Unfortunately, we have noticed lately that some bankruptcy firms recommend Chapter 13 when a shorter, easier and far less expensive Chapter 7 case would suffice. If you have talked to another lawyer who immediately recommended Chapter 13 without even discussing Chapter 7, TALK TO US BEFORE YOUR FILE. We will not put you into a Chapter 13 that is not necessary or desirable just to collect fees. If you are already in a Chapter 13 case after having had a similar experience, TALK TO US. We might be able to convert your case to Chapter 7 and accomplish everything you want to WITHOUT HAVING TO MAKE CHAPTER 13 PAYMENTS