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Chapter 13 Bankruptcy Law | Common Questions in Denver, Colorado

Chapter 13 Questions and Answers in Denver Colorado

More Information About Chapter 13 Bankruptcy

The information provided on this website is for informational purposes only and is not to be taken as legal advise.

What is a Chapter 13 bankruptcy case and how does it work?

A Chapter 13 bankruptcy case is a proceeding under federal law in which the debtor seeks relief under the Bankruptcy Code.  A person who files a Chapter 13 case is called a debtor. The debtor will pay back a portion of their debts in a Chapter 13 bankruptcy. In some cases the distribution to unsecured creditors is only 10%. Meaning, the remaining balances (the other 90%) are discharged.  You will make payments directly to the Chapter 13 trustee, who will then distribute the payments to your creditors according to the plan your attorney submits to the court. Keep in mind that creditors and the chapter 13 trustee may object to your attorney’s plan for any number of reasons. Usually because it doesn’t provide adequate payments to creditors.  After you complete the plan (3-5 years), the remaining unsecured debts are discharged.
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How does a Chapter 13 case differ from a Chapter 7 case?

A chapter 7 is a straight discharge. A debtor does not make payments in a chapter 7 case. In a chapter 13, a debtor makes payments to the bankruptcy trustee before receiving a discharge. In a chapter 7, some of your property may be liquidated (additional vehicles, boats, rental homes, tax refunds) before you receive a discharge. In most cases, the majority of a debtors property is exempt from turn-over. Many cases are no-asset cases.
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When is a Chapter 13 bankruptcy case preferable to a Chapter 7 bankruptcy case?

Chapter 13 bankruptcy may be preferable to someone who has property which would be lost in a chapter 7 bankruptcy (e.g. too much equity in the home). Others file a chapter 13 because they are not eligible to file under chapter 7 bankruptcy for reasons of their income being too high or they recently filed a chapter 7.  You may have debt which would not be discharged in a chapter 7 bankruptcy (priority tax debts) but which can be dealt with in a chapter 13.
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How does a Chapter 13 bankruptcy case differ from consolidation / credit counseling?

Your creditors are forced into a Chapter 13 bankruptcy once you file. Some creditors may not agree to take part in a consolidation program. A chapter 13 filing provides immediate relief from your creditors. You are still accountable to your creditors while in a consolidation program. You cannot get garnished by creditors during a chapter 13. No such protection exists in a consolidation. Another important difference is interest payments. In a chapter 13, you do not pay interest to unsecured creditors (credit cards, private loans). In a consolidation, the agency takes a percentage of your payments and your creditors agree to a reduced interest rate.
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What is a Chapter 13 bankruptcy discharge?

This is the court order which provides you permanent relief of your debts which were included in the bankruptcy. Until you receive your discharge, you are not completely free from your creditors. Be sure to complete your plan.
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What is a Chapter 13 bankruptcy plan?

This plan comes in standard form. Your attorney will complete the sections which are applicable to your case. The plan provides for the total amount of payments, the amount your creditors receive under the plan and the length of the plan.
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What is a Chapter 13 bankruptcy trustee?

A chapter 13 trustee is a person appointed by the United States Trustee to administer chapter 13 bankruptcies. The trustee ensures the plans it overseas are fair to creditors and may object to the plan if it fails to adhere to the bankruptcy rules. The trustee collects payments from the debtor and makes distributions to creditors according to the plan.
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How much do I have to pay back to my creditors in Chapter 13 bankruptcy?

This is where the means test form comes in (Form 22C). Your attorney will complete this form on your behalf. You should review the form to be certain it provides for all of your expenses (big and small). The form can get quite complicated. In some cases, your income from the last 6 months may not reflect your current situation.  It may make sense to wait a few months to file. Your attorney can explain the ins and outs of this form. It is crucial to get this form completed accurately and thoroughly. If you place your focus anywhere during the bankruptcy process, be sure you pay a lot of attention to the means test form. The purpose of the form is to calculate your disposable income and the amount you have to pay to your creditors. The more aggressive the deductions (expenses) you take from your gross income, the lower your plan payments will be. Not all expenses are allowed and some are limited by IRS local standards. Be sure you understand this form before you file.
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When do my payments start?

You must begin making payments within 30 days of the petition filing date.
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How long do I have to make payments?

The duration of your plan will be from 3-5 years. Below median income debtors usually have 3 year plans. Above median income debtors are in 5 year plans. Consult with your attorney regarding your plan length.
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Can my creditors object to my chapter filing?

Not exactly. In some rare cases, your filing may represent an abuse. If you used an attorney to file, this is very unlikely to be an issue.
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How do I know if I am eligible to file a Chapter 13 bankruptcy case?

Anyone (i.e., natural person) may file a Chapter 13 bankruptcy case if  he/she(1) resides in, does business in, or owns property in the United States, (2) has regular income, (3) has unsecured debts of less than $336,900, (4) has secured debts of less than $1,010,650, (5) is not a stockbroker or a commodity broker, (6) has not intentionally dismissed another bankruptcy case within the last 180 days, and (7) has received a briefing from an approved credit counseling agency within the last 180 days (unless this requirement is not in effect in the local bankruptcy court).
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Can I file a Chapter 13 bankruptcy with my spouse?

Yes, so long as one of the spouses meets the income requirements and both spouses are otherwise eligible.
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May a self-employed person file a Chapter 13 bankruptcy case?

Yes, however, those debtors who work strictly off commissions may not qualify because regular income usually does not include commissions. Speak to an attorney regarding this issue if it applies to you.
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Can a Chapter 7 bankruptcy case be converted to a Chapter 13 bankruptcy case?

Yes a person may convert their Chapter 7 to a Chapter 13. In some rare cases, the Chapter 7 trustee may object if he/she believes the debtor converted to a chapter 13 bankruptcy simply to avoid turning over assets in a Chapter 7 bankruptcy.
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What fees are charged in a Chapter 13 bankruptcy case?

There is a $286 court filing fee and bankruptcy attorneys charge anywhere from $3,000 to $5,000 and upwards (depending on the attorney and the complexity of the case).
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Does the Chapter 13 bankruptcy stop all collection activity?

Yes, the automatic stay enters as soon as the case is filed to protect the debtor from creditors and garnishments.
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Will my employer find out I filed for Chapter 13 bankruptcy?

This is unlikely unless you have a current wage garnishment. This is another reason to take steps to resolve your debts right away. It is rare for an employer to take action against someone who filed bankruptcy and in most cases it is illegal for an employer to consider a bankruptcy filing for employment purposes.
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Do I have to go to court?

Usually the only court appearance a debtor will make is for the meeting of creditors which takes place about 30 days after filing. In some cases, the debtor may appear for a court hearing related to their repayment plan to verify the information their attorney submitted.
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What are the debtor’s attorney’s responsibilities in a Chapter 13 bankruptcy case?

The debtor’s attorney performs the following functions in a typical chapter 13 case:

  1. Determining whether a chapter 13 is feasible and explaining the outcomes to the debtor according to his/her own unique financial situation.
  2. Helping the debtor to prepare a  budget.
  3. Ensuring that secured creditors claims are provided for inside or outside the plan.
  4. Preparing the chapter 13 plan and filing the plan on creditors and the court.
  5. Preparing the necessary pleadings and chapter 13 bankruptcy forms.
  6. Filing the chapter 13 forms and pleadings with the court.
  7. Attending the meeting of creditors, the confirmation hearing, and any other court hearings required in the case.
  8. Assisting the debtor in obtaining court approval of a chapter 13 bankruptcy plan.
  9. Checking the claims filed in the case, filing objections to improper claims, and attending court hearings.
  10. Assisting the debtor in overcoming any legal obstacles that may arise during the course of the case.
  11. Assisting the debtor in attending and completing the required instructional course on personal fin management.
  12. Assisting the debtor in obtaining a discharge upon the completion or termination of the plan

The fee charged by an attorney for representing a debtor in a Chapter 13 bankruptcy case must be reviewed and approved by bankruptcy court for reasonableness.

Chapter 13 Bankruptcy Resource

United States Bankruptcy Courts
The official Web site of the United States Bankruptcy Courts includes a
variety of useful information about bankruptcy.


Bankruptcy Glossary
This Web site includes a glossary on bankruptcy terminology that explains,
in layman’s terms, many of the legal terms that are used in cases filed
under the Bankruptcy Code.


Bankruptcy Fees
This Web page, maintained by the Administrative Office of the US Courts on
behalf of the US Courts, contains the fees associated with a bankruptcy
filing under a particular chapter.


Bankruptcy Forms
This Web site, maintained by the United States Bankruptcy Courts, includes
Official Bankruptcy Forms, Procedural Forms and the Bankruptcy Forms Manual.
All forms and instructions are available in PDF format.


Chapter 13 Basics
This Web page provides general information about individual debt adjustment
under Chapter 13 of the Bankruptcy Code.

Additional information about Chapter 13 Bankruptcy

If you have more questions about the best options for your current financial situation, call Consumer Law Pro today to speak with a bankruptcy expert at (303) 297-7729.