|
|
Chapter 13 Debt Adjustment
A Chapter 13 is somewhat similar to a Chapter 11 Reorganization except it is used only by individuals with regular income to adjust their debt structure while obtaining a breathing spell from creditor demands. During the process, the Debtor proposes a Plan, which is not voted on by creditors, that provides for full or partial repayment of creditors. The advantage of Chapter 13 is that it allows the Debtor to retain control of the Debtor's property and allows Debtor to pay back arrearages on real property and discharge debts that might not be discharged in Chapter 7. It is much less expensive and complicated than a Chapter 11.
|
|
|
Filing Chapter 13
At the time of filing, certain documents must be filed immediately or at least within 15 days of the filing of the petition. Those documents include the following.
Bankruptcy papers consist of a two-page "Petition", a 15 to 21 question Statement of Financial Affairs, and the following Schedules:
ASSETS
A. Real Property.
B. Personal Property.
C. Property Claimed as Exempt.
DEBTS
D. Creditors Holding Secured Claims.
E. Creditors Holding Unsecured Priority Claims(Taxes, etc.)
F. Creditors Holding Unsecured Non Priority Claims.
G. Executory Contracts and Unexpired Leases.
H. Co debtors.
I. Schedule of Income
J. Schedule of Expenses
In addition, a Chapter 13 Debtor has to file a Plan for payment of creditors over a period of three to five years.
The filing of the Petition creates an automatic stay against virtually any action to pursue any claim against the Debtor or any assets without first obtaining Court approval.
|
|
The Plan
The plan has to be filed within 15 days of filing the petition. A Trustee is appointed to review the Plan and the Debtor's assets. The Trustee will make a recommendation to the Court as to whether the Plan treats creditors fairly and that creditors will receive at least as much as they would receive in Chapter 7. The Trustee also attempts to determine whether the Debtor has the ability to complete the Plan. A confirmation hearing is held. Creditors get notice and can object. A Judge determines whether the Plan is fair and feasible. If the Judge approves, the Plan goes into effect.
Pending approval of the Plan, the Debtor must start making the payments, which go through the Chapter 13 Trustee. Before or after approval, if there is any default on the Plan payments, the Trustee or any creditor can ask the Court to Dismiss the Chapter 13.
Upon completion of the Chapter 13, the Debtor gets a discharge. Until that time, the Debtor's ability to borrow or sell any asset is severely limited. Like a Chapter 7, a Chapter 13 goes on the Debtor's credit record.
Contact Mr. Winters if you need further information on this procedure.
WINTERS LAW FIRM
1820 East 17th Street
Santa Ana, CA 92705
Telephone:(714)836-1381
FAX:(714)542-2495
e-mail:
winterslawfirm@cs.com
|
|
|
|
