The Ins and Outs of Chapter 13 Bankruptcy

Lerner & Rowe Law Group


A Chapter 13 bankruptcy enables individuals with above-average income to develop a plan to repay all or a portion of their debts.

Under this chapter, debtors; with the help of a Phoenix bankruptcy attorney, propose a repayment plan to make installments to creditors over three to five years.

One of the most attractive features of a Chapter 13 bankruptcy is the chance to stop home foreclosures and car repossessions.

Advantages of Filing a Chapter 13 Bankruptcy

Filing a Chapter 13 bankruptcy suspends any current repossession and foreclosure proceedings and payment of any other debts owed. This provides a debtor time while the court considers the plan – but it does not eliminate the debt. With the help of experienced Phoenix bankruptcy lawyers, a debtor can free up enough income to be able to make regular mortgage payments and keep their house.

Another advantage of the Chapter 13 bankruptcy is that it allows individuals to reschedule secured debt. It also extends payments out over the life of the Chapter 13 plan. This may lower payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on consumer debts.

This provision protects co-signers. Lastly, a Chapter 13 bankruptcy acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under the Chapter 13 protection.

Kick-Starting a Chapter 13

A Chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. Unless the court orders otherwise, the debtor must also file the following with the court:

  • Schedules of assets and liabilities
  • A schedule of current income and expenditures
  • Schedule of executory contracts and unexpired leases
  • A statement of financial affairs

The debtor also files a certificate of credit counseling; evidence of payment from employers; a statement of monthly net income and any anticipated increase in income or expenses after filing. The debtor must provide the Chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case is started).

Court Fees to Know When Filing for Bankruptcy

A filing fee of $310 must be paid to the clerk of the court upon filing. A husband and wife may file a joint petition. If filing a joint petition, only one filing fee is charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. To avoid a dismissal, for any reason, its recommended working with an experienced bankruptcy lawyer to assist with the preparation and filing of the bankruptcy petition.

Required Key Information

In order to complete the Official Bankruptcy Forms, debtors need to collect the following information:

  • A list of all creditors and the amounts and nature of their claims;
  • The source, amount, and frequency of the debtor’s income; and,
  • A list of all of the debtor’s property and a detailed list of the debtor’s monthly living expenses: food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Most individuals must gather this information for their spouse regardless of whether they are filing a joint petition or a separate individual petition. In a situation where only one spouse files, the income and expenses of the non-filing spouse is still required. This make it so the court, trustee and creditors can evaluate the household’s financial position.

The First 30 Days After You File

Within 30 days after filing the Chapter 13 bankruptcy, the debtor must start making plan payments to the trustee. This deadline applies even if the plan has not yet been approved by the court. If any secured loan payments or lease payments come due before the debtor’s plan is confirmed (for example a home or automobile payment), the debtor must make adequate protection payments to the secured lender directly.

45 Days After You File

No later than 45 days after the filing of a case, a Meeting of the Creditors takes place to establish a payment plan. Once confirmed, the debtor becomes responsible for making all Chapter 13 payments for the remainder of their agreed term. If for some reason the debtor cannot make a payment, they should contact their bankruptcy attorney immediately.

Common Misconceptions Put to Rest by Experienced Phoenix Bankruptcy Attorneys

A common misconception is that a plan provides for the repayment of all unsecured debt. This is not true! While a plan must provide for the payment of all home arrears, most back taxes and all back alimony or child support, the vast majority of plans provide for only a small portion of the unsecured debt being paid. An experienced Phoenix bankruptcy attorney will help you get the maximum benefit of a Chapter 13 bankruptcy. They do this all while minimizing the burdens of the plan.

Filing a Chapter 13 bankruptcy can be a complex, which is why you should find a qualified Phoenix bankruptcy attorney to guide you through the process. Contact the experienced bankruptcy lawyers with the Lerner and Rowe Law Group today to help you determine whether bankruptcy is right for you. We answer our phones at 602-667-777724/7.