Yes, you can keep your house and avoid foreclosure if you file Chapter 13 bankruptcy. The bankruptcy adviser helps guide you through the process. An individual cannot file under chapter 13 or any other chapter if, during the preceding days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property. Step. When It Happens. You complete your official bankruptcy paperwork and take a pre-filing credit counseling course.; Before you file your Chapter 13 bankruptcy case. 2. You file for Chapter 13 bankruptcy. 3. The automatic stay takes effect. It bars most creditors from taking any actions to collect what you Author: Cara O'neill, Attorney.
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Dear Eileen, Yes, you can. This is different from Chapter 7 bankruptcy liquidation bankruptcy. Each has different merits. In Chapter 7, you liquidate your assets, distribute the cash to creditors and have your debt erased relatively quickly — usually within 4 months. In Chapter 13, you keep your house, but it takes 3 to 5 years of faithfully conforming to a payment plan before getting your fresh start.
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. 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. 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. 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. 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.
You are also required to file any unfiled tax returns for the past four years. The number of installments is limited to four, and the debtor must make the final installment no later than days after filing the petition. For cause shown, the court may extend the time of any installment, as long as the last installment is paid no later than days after filing the petition. If a joint petition is filed, only one filing fee and one administrative fee are charged.
Debtors should be aware that failure to pay these fees may result in dismissal of the case. In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:.
Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household's financial position.
When an individual files a chapter 13 petition, an impartial trustee is appointed to administer the case. In some districts, the U. The chapter 13 trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors.
Filing the petition under chapter 13 "automatically stays" stops most collection actions against the debtor or the debtor's property. Filing the petition does not, however, stay certain types of actions listed under 11 U. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.
Chapter 13 also contains a special automatic stay provision that protects co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a "consumer debt" from any individual who is liable along with the debtor. Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose.
Individuals may use a chapter 13 proceeding to save their home from foreclosure. The automatic stay stops the foreclosure proceeding as soon as the individual files the chapter 13 petition. The individual may then bring the past-due payments current over a reasonable period of time. Nevertheless, the debtor may still lose the home if the mortgage company completes the foreclosure sale under state law before the debtor files the petition.
The debtor may also lose the home if he or she fails to make the regular mortgage payments that come due after the chapter 13 filing. Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. If the U. During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of the plan.
If a husband and wife file a joint petition, they both must attend the creditors' meeting and answer questions. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the creditors' meeting.
The parties typically resolve problems with the plan either during or shortly after the creditors' meeting. Generally, the debtor can avoid problems by making sure that the petition and plan are complete and accurate, and by consulting with the trustee prior to the meeting. In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors.
A governmental unit, however, has days from the date the case is filed file a proof of claim. After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor's chapter 13 repayment plan. Unless the court grants an extension, the debtor must file a repayment plan with the petition or within 14 days after the petition is filed. A plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis, typically biweekly or monthly.
The trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment on their claims. There are three types of claims: priority, secured, and unsecured.
Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding. In contrast to secured claims, unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor. The plan must pay priority claims in full unless a particular priority creditor agrees to different treatment of the claim or, in the case of a domestic support obligation, unless the debtor contributes all "disposable income" - discussed below - to a five-year plan.
If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral e.
Payments to certain secured creditors i.