A Chapter 13 bankruptcy is more commonly known as the “wage earner” plan. A Chapter 13 creates a repayment plan which pays creditors over a 3-5 year period. Where the debtor’s current monthly income is less than the state median for the same size household, the plan must be 3 years. Similarly, a debtor with a current monthly income above the state median must remain in a plan for 5 years. Here the debtor’s earned wages become part of the bankruptcy estate for the duration of the plan. A debtor will only receive a discharge after all payments and certifications are made and a financial management course is completed.
A chapter 13 is available to individuals with less than $383,175 in unsecured debt and less than $1,149,525.11 secured debt. Additionally, the debtor must have completed credit counseling in the 180 days before filing.
The decision to file a Chapter 13 should begin with an honest conversation with an attorney to go through the pros and cons of filing. Prior to filing the petition, the debtor should complete credit counseling and the means test. The Chapter 13 bankruptcy case is started when the petition is filed, at which time the automatic stay goes into effect. Shortly after filing the petition, the required schedules of income, assets, debts and property must be filed along with tax returns. The Court will appoint a Chapter 13 administrator to oversee the case. 14 days post-petition, the debtor must file a proposed plan for review by creditors and the court. Between 21-50 days after the filing of the petition, the 341 meeting with the debtor, their creditors and the administrator will be held. The debtor must begin to make plan payments 30 days after filing regardless of whether a plan has been confirmed. The court will hold a confirmation hearing approximately 45 days after the 341 meeting.
A debtor will only be entitled to a confirmation only after completing all plan payments and a certification that all past-due domestic support obligations have been paid, there has not been a prior bankruptcy discharge within the past 2-4 years and the debtor has completed an approved financial management course.
Attorney Jaime Williams‘s bankruptcy practice includes all manners of bankruptcy issues that can affect most people. Jaime can tell you whether you qualify to file for bankruptcy and what chapter is the best fit for your needs. Jaime handles bankruptcy cases that fall under Chapter 7 (liquidation), Chapter 11 (business reorganization), and Chapter 13 (individual reorganization). Jaime’s bankruptcy practice also includes Adversary Proceedings (separating filings related to a bankruptcy case, usually filed by a creditor).
Bankruptcy falls under the jurisdiction of federal courts. Individuals residing in Franklin, Granville, Harnett, Johnston, Nash, Wake, Warren and Vance county will have their cases heard in the Raleigh office of the United States Bankruptcy Court of the Eastern District of North Carolina.
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