The Basics of Chapter 13 Bankruptcy

If you are going to file for bankruptcy, you have a choice to make. This choice is important and will affect the rest of your bankruptcy as well as the next few years of your life. As such, careful attention should be given to your circumstances and your future before making your decision; if you decide to file a Chapter 13 bankruptcy, following a few simple guidelines will help you make it through the process smoothly and quickly.

Making the Choice: Chapter 7 or Chapter 13?

After finding an attorney – or even before, if you feel so inclined – you must take the Means Test. The primary use for the Means Test, which consists of calculating debt, income, and expenses, is to find out whether or not you qualify for a Chapter 7; however, it is information you will need to know regardless of whether you pass or fail. Additionally, some people who qualify for a 7 will still choose to file a 13 for various reasons. If you pass the Means Test and want to file a 7, this is not a difficult decision to make. If you pass the Means Test and are not sure whether or not you want to file a 7, you must consider your situation and your options carefully and make the best decision for yourself or your family, no matter how painful it might seem right now. If you fail the Means Test, there is still a small window in which you may be able to file a 7, but you must discuss that with your attorney.

Making a Budget: Realistic Monthly Expenses

This is a very important step in Chapter 13 bankruptcies. Because a 13 will not get rid of your debt, you will still be required to make payments each month; the difference is in the amount paid. A clear and concise budget will help determine that amount. There are some rules to follow; in some categories, there is a set amount of money you can budget for things. In others, it is slightly flexible. If you remember to be accurate and follow the rules, you can ensure that your monthly budget works with your income level and your expenses. You can ask your attorney if you have questions about a specific category, but it is mostly self-explanatory and easy to understand.

Completing Your Paperwork: Lists and Ledgers

Bankruptcies come with a lot of paperwork. This is inescapable; you must gather information and fill out forms if you want to be able to file. Make a list of your creditors and the amounts you owe each of them; make a detailed accounting of your income and the frequency with which you are paid; bring in your paystubs and your tax return information; and even if you are filing a 13, you still need to bring in a list of your assets as well. This information will help you to complete the paperwork you must fill out and return to your attorney. It is very important to be honest during this process, as omissions can get you into a lot of trouble with the court as well as potentially keep you from being eligible for bankruptcy.

Other Legal Matters: Court and Meetings

You may not want to see your creditors right now, but in order to continue with your bankruptcy, you must meet with them to discuss the details of your bankruptcy and your proposed course of action. Do not worry too much about this; your attorney will be there with you. Additionally, filing will initiate an automatic stay, so none of your creditors will be able to harass you or even contact you outside of your meetings. Before your bankruptcy can finish, you must also appear in front of a judge. Failure to appear in court can make it difficult, if not impossible, to complete your bankruptcy, as a judge must approve it; keep your schedule open and don’t forget the date! Filing a 13 is not as difficult as it may seem, and as long as you are consistent and honest and ask your attorney if you have any questions, you should not have too many problems.

"I was worried I would lose everything. Brian helped me sort things out and restored my life. I don't know where I'd be without him!"

-Sue H. Ogden, UT