Filing Chapter 13 Bankruptcy -

     The Chapter 13 case starts with the filing of the Chapter 13 petition, schedules of assets and liabilities, statement of current income and expenses, and a Chapter 13 plan. The debtor is required to pay a filing fee of $ 274.00. In a case of hardship, the debtor can ask to pay the filing fee in 4 equal installments, with the last payment due no later than 120 days after the filing, unless extended for cause up to 180 days after the filing. If the filing fee is not paid in full within the required time, the case will be dismissed.

"Skeleton" Petition

     In the event of an emergency, a debtor can file a "skeleton" petition, where the face page of the petition and a list of all creditors is filed. The debtor then has 14 days within which to file a plan, and 45 days to file the balance of the documents. This type of petition is filed where the debtor has waited until the last minute before seeing counsel and filing.

     Most of the time, it is done just before a scheduled foreclosure sale, eviction, or wage garnishment. It is generally the better practice to try to have all of the required papers filed with the initial petition. This makes the system function better and minimizes delay. However, the key is to file bankruptcy papers which are complete and accurate, so that the case can be properly analyzed by the trustee, creditors, and the bankruptcy judge.

Chapter 13 Trustee

     The court appoints a person to act as the Chapter 13 trustee. In many districts, there is a "standing trustee" for each particular court or geographical area, who may have up to 10,000 cases or more and a staff of 30 or more. The trustee has the job of both evaluating the case and making recommendations to the court, and acting as the disbursing agent for the debtor's plan payments. The Chapter 13 trustee's officeis funded by a portion of the plan payments, usually anywhere between 4-10%. The Chapter 13 trustee is generally selected by the local United States Trustee.

Giving Documents to the Trustee

     The debtor is required to provide the Chapter 13 trustee with paystubs for the 60-day period prior to the filing, as well as copies of his tax return for the most recent year. In certain cases, especially those involving sole proprietors, the trustee will request copies of business related records, including business bank statements, profit and loss statements, evidence of business liability insurance, and related items. The debtor has a duty to cooperate with the trustee in providing this documentation.

Automatic Stay

     Once the debtor files his case, he receives the benefit of the "automatic stay" of 11 U.S.C. Section 362(a). That section provides that immediately upon the filing, all creditor actions are stayed--creditors can no longer sue, take the debtor's wages, foreclose, evict, or even contact the debtor to collect the debt. The stay is truly "automatic"--the debtor is not required to notify his creditors. Noticing is taken care of by the bankruptcy court clerk, who will send out notice of the filing to all of the creditors listed by the debtor in his filing papers.

Foreclosure or Eviction During the Automatic Stay

     Where there is a foreclosure or eviction or other serious action about to occur, it is common for the debtor or his counsel to voluntarily advise the creditor in writing of the bankruptcy filing, immediately upon filing, so that the creditor observes the stay. Acts taken in violation of the automatic stay are either completely void, or voidable at the instance of the debtor. A creditor may be subject to a suit for damages and attorney's fees for a willful violation of the automatic stay.

Written by Henry Rendler