Ch. 13 Bankruptcy FAQ

Every bankruptcy filing is different, and filing under Chapter 13 can be confusing. To help you feel more comfortable about the process, below are some frequently asked questions about Chapter 13 bankruptcy filings. If you have additional questions, a bankruptcy attorney can help you find the information you are looking for.

How do I file for Chapter 13 bankruptcy?

Chapter 13 bankruptcy involves restructuring your debts to make it easier for you to pay creditors. Before filing for bankruptcy, you are required to seek credit counseling. After you have completed counseling, you have 180 days to file a petition with the bankruptcy court. Generally, you will want an attorney's help to do so. Your filing must be accompanied by a payment of a $235 case filing fee and a miscellaneous administrative fee of $75 to the court.

Your filing should include a repayment plan for the next three years if your monthly income is less than the state median wage amount. The bankruptcy plan will last five years if your monthly income is higher than the state median.

Generally, your bankruptcy filing will include official forms that ask for the following information:

  • Names of creditors, the amounts they are owed and the nature of their claims
  • Your income source and the amount and frequency of payment
  • A list of your property
  • Detailed accounting of your monthly living expenses such as shelter, food, utilities, taxes, transportation and clothing

Does filing for Chapter 13 bankruptcy stop creditors from collecting?

Typically, creditors must stop contacting you to demand payments on your obligations after your petition is filed. All collection activity is stayed by the court, which prevents creditors from initiating or pursuing lawsuits or wage garnishments against you. Additionally, you should not directly contact your creditors.

The special automatic stay granted by the court covers the collection of consumer debt that you incurred for personal, household or family purposes.

In some cases, a creditor must return any payment it received from you after a petition for bankruptcy protection is filed. Those funds are then available to all creditors in your initial list that started the bankruptcy process.

Is credit card debt included in a Chapter 13 repayment plan?

Your debts are placed into three main separate classifications:

  • General unsecured debt
  • Priority debts
  • Secured debt

Debt accumulated from credit cards is considered general unsecured debt, which is listed last according to the order of repayment. There are a number of factors that determine how much is paid to this classification of creditors. Typically, credit card debt included in your bankruptcy filing is not paid in full.

What happens if I miss a scheduled payment under my Chapter 13 repayment plan?

Either the trustee or one of your creditors might ask the court to dismiss your bankruptcy case if you miss one of the scheduled payments. This does not mean, however, that you are out of options.

One option is to bring your payments current. A temporary financial emergency might be the cause, but once the emergency is resolved, you may just need extra time to get caught up.

Explain the situation to the court if your case is facing dismissal. Most courts will grant your request of more time to allow you to catch up with your payments.

Another option is to request a modification or reduction of your monthly payments. Typically, this request applies when your financial emergency will be lasting, such as if you lose your job or your income is permanently reduced.

Modifying your payment plan requires proposing a new affordable monthly payment. The court will need documentation to support the change in your circumstances along with a new budget.

Will my student loan debt be discharged with a Chapter 13 bankruptcy?

Before the court will consider discharging your student loan debt, you will need to file a separate petition called a Complaint to Determine Dischargeability of a Debt. Most likely, the bankruptcy court will not discharge your student loan debt. Rules of Chapter 13 bankruptcy considers student loan debt a priority debt, which is payable in full. Convincing the court to partially release you of this financial obligation is extremely difficult.

However, the court will consider undue hardship factors that may contribute to your inability to repay a student loan. Poverty, permanent disability and past good faith efforts to repay the loan may be considered.

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