Chapter 13 bankruptcy is the second most common type of personal bankruptcy filed in the United States today. It is also the more complex of the two. A Chapter 13 bankruptcy is considered more complex because it involves a 3-5 year payment plan in which the debtor is allowed to payback a percentage of their overall unsecured debt. So, for our purposes the timeline will be a minimum of 3-5 years. This may seem like a long time, but it will go by quickly and at the end of the payment plan you will be debt free. Here’s a generic timeline to help you see how your Chapter 13 bankruptcy will go:
- Locate and Hire an Attorney – Because of its complexity, it is nearly impossible to file a Chapter 13 bankruptcy without a licensed attorney. The payment plan involves specific calculations and constant communication with the bankruptcy court that the average layman just can’t do. The time it takes you to locate and hire an attorney is dependent entirely on you.
- Provide paperwork – Once you have hired an attorney you will be responsible for providing them the financial documentation they need. Most of the required paperwork involves items that you alone will have access to, and this is why the attorney does not obtain them. The paperwork includes pay stubs, bank statements, prior year tax returns, mortgage documents, car loan information, and other financial items.
- Draft Petition – The documentation you provide to your Chapter 13 bankruptcy attorney
- is for his/her use in preparing the official document required to file a bankruptcy: the petition. The amount of time needed to draft the petition depends on a lot of variables, but you should check with your attorney for an estimate.
- Confirmation Hearing – After your case has been filed the bankruptcy court will set up a time to meet with your attorney to discuss the repayment plan he/she has requested for your Chapter 13 case. This is called a confirmation hearing and you are not required to attend if your attorney is present. In many cases it is not necessary for the debtor to be present. The bankruptcy trustee will either approve your plan or send it back to be revised.
- Meeting of creditors – If your payment plan is approved then the court will schedule another hearing which you will be required to attend known as the meeting of creditors. This hearing will involve the bankruptcy trustee asking you a series of questions to ensure that no fraud has taken place.
- Payment Plan – Your first Chapter 13 payment will be due 30 days after your case was filed and will continue for 3-5 years depending on what the court agreed to. You will make 1 payment every month.
- Discharge – At the end of your payment plan you will receive discharge papers in the mail from the bankruptcy court stating that your case was successfully completed. This means that you are debt free and done with your Chapter 13 bankruptcy!