What Happens After You File a Chapter 13 Bankruptcy?
As soon as you file, your chapter 13 bankruptcy case has officially started. Your case will be assigned to the trustee who serves your county in Arizona. If you filed paperwork to pay your filing fee in installments the court will “enter” the order, meaning the order is signed and filed with the clerk of the court.
The Automatic Stay
If you have banks and other creditors calling or sending you letters about late payments, filing bankruptcy will immediately put into effect what is referred to as an “automatic stay.If your bank is threatening or moving to foreclose on your house, as soon as you file bankruptcy, the bank must stop any foreclosure proceedings. This also applies to credit card or collection agencies that may be harassing you with phone calls or letters. Even though the stay automatically comes into effect when you file, a bank or collection agency can ask the court to lift the stay.
If a creditor asked for the stay to be lifted and you then decided to ask the court to dismiss your case (called a voluntary dismissal) you can’t file a new Chapter 13 bankruptcy case with 180 days of the voluntary dismissal. The purpose of this eligibility requirement is to keep people from abusing the automatic stay that is granted as soon as you file a bankruptcy case.
Co-Signers or Co-Debtors
The automatic stay is specifically for any debts you incurred before you filed bankruptcy. If there are other individuals who were co-signers (or co-debtors) on any of your loans, for the most part these individuals are also protected from any actions being taken by banks and other companies that loaned you money. Your creditors need to ask the court for permission to take any actions once you’ve filed for chapter 13 bankruptcy.
The court may allow creditors to take actions against co-debtors on your loans if that person was the main individual who received the benefit for the loan. For example, if you were the co-signer on a car loan, but the car was for the other person (who is not a spouse and did not co-file bankruptcy with you) the court may give the company permission to take action against the other person.
The other two circumstances under which the court might give a creditor permission to take action against a co-debtor would be if you indicate in your repayment plan that you do not intend to pay on the loan or if the creditor would be harmed irreparably. “Irreparably harmed” means that once the harm happens, things cannot be put back to the way they were before the harm or money will not repair the harm.
Making Plan Payments
You must begin making payments on your proposed plan within 30 days after you file a chapter 13 bankruptcy. Even though the court has not confirmed or approved your plan, asking you to begin making payments gives the court evidence that you have the ability to pay. It also allows your creditors to get paid back as quickly as possible. Depending on the circumstances in your case, you can request that your payments be made through a wage deduction. Sometimes this is required, again, depending on your circumstances. As experienced Arizona bankruptcy attorneys, we can guide you through this process.
Your payments are sent to the trustee while your chapter 13 bankruptcy case is in process. If your plan is not confirmed then the payments are returned to you minus any administrative costs. If you do not start making payments within 30 days, the court may dismiss your bankruptcy case. If you have loans that are secured by personal property that is losing value, you will need to make what is referred to “adequate protection” payments.
You are also required to file any unfiled tax returns for the past four years. If you don’t file the returns, the meeting of creditors could be delayed and your case could be dismissed.
Shortly after you file, the court clerk will send notice of the meeting of creditors. The notice will include information about the automatic stay and deadlines for creditors to file their claims and/or object to any property exemptions. This notice also includes the date set for the confirmation hearing and the deadline for anyone to object to the confirmation of your payment plan.
Meeting of Creditors
Anywhere from three weeks to fifty days after you file your bankruptcy paperwork, there will be a meeting of creditors. Sometimes this is referred to as the 341(a) meeting of creditors from the section of the bankruptcy code that requires the meeting. Seven days before the meeting you will be required to give to the trustee copies of your federal income tax return for the previous tax year. If you were not required to file taxes, you provide a statement saying so.
At the meeting you must bring a government-issued picture identification (or other identifying documents), some proof of your social security number, paperwork proving your current income, as well as bank and investment account statements. You also provide any documentation of your monthly income. If you don’t have any documentation of your monthly income, then you must bring statement saying that.
At the meeting, the trustee will ask routine questions about information that you’ve provided to her or him as part of the bankruptcy process. Bankruptcy judges are not allowed to attend the meeting of creditors. The trustee needs to gain an understanding of your case and make a decision about objecting to any of the claims brought by your creditors. It is unlikely any of your creditors will attend the meeting.
You can also dispute (or object) to any of the claims made by your creditors. If there are objections, these issues are then decided by the bankruptcy judge. This is why the judge doesn’t attend the meeting of creditors. Sometimes the judge will decide on objections to claims at the hearing set up to confirm or deny your payment plan.
Filing a Claim for One of Your Creditors
If one of your creditors does not file a claim, you can choose to file a claim on behalf of that person or company. For example, if you owe child support and your ex-spouse does not file a claim, you would file a claim to ensure the ex-spouse gets paid during the payment plan period. Since unpaid child support cannot be discharged by the court, you would end up having unpaid debts after the repayment period. Or, if you own a car that has an outstanding loan balance and the loan company doesn’t file a claim, you might choose to file the claim to ensure that the trustee makes payments to the company so that your car loan does not become delinquent.
As attorneys with extensive experience with Tucson and Phoenix, Arizona bankruptcy cases, we can properly guide you through the maze of forms, documents, and requirements of your chapter 13 bankruptcy. Don’t leave you financial future to chance and hope for a good outcome. We can provide you with the best legal representation possible in your bankruptcy. Call our office today to set up your free consultation.