Bankruptcy – Chapter 13 – Filing and Qualifications
BANKRUPTCY: Chapter 13 – Filing and Qualifications: Can I File? How do I file?
Q: What is a Chapter 13 Bankruptcy?
A. A “Chapter 13 Bankruptcy” is often referred to as “wage earner” bankruptcy. It is a proceeding under Chapter 13 of the Bankruptcy Code for the “Adjustment of Debts of an Individual with Regular Income”. When you file a Chapter 13, you are agreeing to pay all or a portion of your debts over time, and under the supervision of the bankruptcy court. Generally, it offers you an opportunity to keep your property while using your income to repay some or all of your debts.
Q: Who can file a Chapter 13 Bankruptcy?
A. Only individuals can file a Chapter 13 Bankruptcy. Married couples can choose to file jointly (one bankruptcy case for both spouses), or either spouse can file an individual bankruptcy case without the other spouse filing. An individual doing business as a sole proprietorship can file a Chapter 13. A individual doing business in a partnership with others may be able to file a Chapter 13 as to the debts he is personally liable for and which were derived from the business. Corporations, limited liability companies and most other business entities cannot file a Chapter 7 case.
Q: What are the qualifications for filing Chapter 13 Bankruptcy?
A. To qualify to file a Chapter 13 you must be an individual with regular income sufficient to make payments under your plan of repayment under the Chapter 13. You cannot have more than $360,475 in unsecured debts or more than $1,081,400 in secure debts (Note: These debt limits are adjusted periodically). These amounts are periodically adjusted). You must have filed your income tax returns for each of the four years prior tax years, or you must file these returns before the Creditors Meeting. You must also complete a course or seminar on credit counseling prior to filing your bankruptcy petition.
Q: What is the “Means Test”?
A. The “Means Test” is the common name for a system used in bankruptcy to evaluate whether or not you have the potential ability to repay all or part of your debts. If you “fail the Means Test” there is a presumption that you can make payments and therefore should be required to file a Chapter 13 or a Chapter 11 case. The “Means Test” uses an average of your gross or total “household income” for the last six months to determine a “Current Monthly Income”. It then checks to see if your Current Monthly Income (after some deductions for taxes, medical insurance payment, secured debt payment, and other items) is more or less than a national average needed for the basic support of a household of similar size. If your adjusted Current Monthly Income is above this national average, then you “do not pass the Means Test”, and you cannot file a Chapter 7 Bankruptcy case.
Q: I filed a Chapter 7 Bankruptcy case within the last 8 years, but again or still have debt I need help with. Can I file a Chapter 13?
A. Yes. You can file a Chapter 13 at almost any time – even immediately after receiving a discharge in a Chapter 7 case. However, you still must meet the usually qualifications for filing a Chapter 13 case (See above).
Q. I received a discharge in a Chapter 7 Bankruptcy, but some debts that could not be discharged remain. Can filing a Chapter 13 help me with these debts?
A. Yes, in some situations. In a Chapter 13, you may be able to make Plan payments to pay-off certain tax obligations, student loans, some past due domestic relations obligations, or other debts which were not discharged in the Chapter 7. Filing a Chapter 7 and then immediately filing a Chapter 13 is sometimes called filing a “Chapter 20”.
Q. How do I file?
A. The first step in filing is to complete the Pre-bankruptcy Consumer Credit Counseling. This must be done prior to filing for bankruptcy. The law requires that you take a course or seminar from a qualified consumer credit counseling agency. The course is designed to assist you in evaluating your credit/debt situation, and to help you determine the best course of action for your particular circumstances. You must obtain a certificate of completion of this course before you can file a consumer bankruptcy case or your case will be dismissed. The course can be completed “on-line” on the internet at a number of credit counseling agencies. (Examples: Hummingbird Credit Counseling at www.hbcce.org or Consumer Credit Counseling at www.ccc.org)
Q. After completing the credit counseling course, then what do I do?
A. The next steps are to gather your information (debts, tax returns, etc.), draft your petition and schedules, and file them with the court. While this is a fairly straight forward process, you do need to know the law that applies to each of the items, facts or statements that you are providing court. If you do not understand the significance of what you are stating, then you need to hire an attorney to help and advise you.
Q. What is the Creditors Meeting?
A. The Court will assign a date about four weeks after the filing of your case for a Creditors Meeting to be held. You must attend. It will usually be held in a meeting room at the courthouse, and is conducted in an informal manner. The Creditors Meeting is intended to provide your creditors with an initial opportunity to ask you questions about your assets, and about your indebtedness. As a practical matter, very few creditors actually attend Creditors Meetings. The Trustee will preside at this Meeting, and he/she is required to examine under oath each debtor about his/her bankruptcy filings, assets and other matters. The typical Creditors Meeting only last 5 to 10 minutes.
Q. Who is the Trustee, and what does he/she do?
A. There are two types of trustees involved with bankruptcy cases – the U.S. Trustee, and the standing trustee. You are only likely to meet with or deal with a standing trustee who is private individual that has been appointed to serve as trustee for cases which are randomly assigned to him/her. The Trustee for you case is responsible for representing the bankruptcy estate and its creditors. The Trustee will conduct the Creditors Meeting. An essential part of the Trustee’s duties in the case is to determine if there are any debtor assets that could be successfully sold to realize money (net after exemptions and costs) for payment to the unsecured creditors.
- Contacting the Right Attorney: A consultation with a Georgia bankruptcy attorney can provide you with the information you need to determine which option best addresses your circumstances. As a solo practitioner, I am able to give more time and personalized attention to my clients. I will personally communicate with creditors or banks to resolve your issues. Your case will never be handed down to a legal assistant or other staff member.