Steps Required Prior To Filing Chapter 13 Bankruptcy

Before filing for Chapter 13 bankruptcy, there are several important steps and requirements that you need to fulfill. These preparatory actions are crucial for ensuring that your bankruptcy process goes smoothly and that you are fully informed about the implications of your decision. Here’s a comprehensive checklist of what you need to do prior to filing for Chapter 13 bankruptcy:

1. Gather Financial Documents

You will need to compile a detailed list of your financial documents. This includes, but is not limited to:

• Recent tax returns (typically the last four years)
• Pay stubs or other proof of income for the last six months
• Bank statements
• A list of assets (real estate, vehicles, other property)
• A list of liabilities (credit card debt, loans, mortgages, other obligations)
• Monthly living expenses

2. Complete Credit Counseling

Before you can file for any type of bankruptcy, including Chapter 13, you must complete a credit counseling course from an approved agency within 180 days before your filing date. This session aims to provide you with an understanding of your financial situation, explore alternatives to bankruptcy, and fulfill a legal requirement for bankruptcy filing.

3. Calculate Your Income and Expenses

You’ll need to accurately calculate your monthly income and living expenses to determine your disposable income, which is crucial for your Chapter 13 repayment plan. This calculation will show how much you can afford to pay toward your debts each month.

4. Determine Your Eligibility

Ensure that you meet the eligibility criteria for Chapter 13 bankruptcy:

• You have a regular income.
• Your unsecured debts are below $419,275, and your secured debts are below $1,257,850 (as of the last update in April 2023; these amounts are adjusted periodically).
• You are not barred by a previous bankruptcy discharge within certain time frames.
• You have completed the required credit counseling.

5. Understand the Impacts of Bankruptcy

It’s important to understand both the benefits and the consequences of filing for bankruptcy. This includes the impact on your credit score, the ability to obtain future credit, and the public record of your bankruptcy filing. Consider consulting with a financial advisor or a bankruptcy attorney to fully understand the implications.

6. Consult with a Bankruptcy Attorney

While it’s possible to file for bankruptcy on your own, the complexity of Chapter 13 cases strongly suggests the need for legal advice. A bankruptcy attorney can help you navigate the legal requirements, assist in preparing your filing, and advise on the best strategies for your situation.

7. Prepare Your Bankruptcy Petition and Repayment Plan

Your bankruptcy petition will include all your financial information, schedules of assets and liabilities, income and expenses, and more. Along with the petition, you will need to propose a repayment plan that outlines how you intend to pay off your debts over the next three to five years. This plan must be feasible and comply with bankruptcy laws.

8. Pay the Filing Fee or Request a Waiver

There is a fee to file for Chapter 13 bankruptcy. If you cannot afford the filing fee, you can request to pay it in installments or, in very rare cases, request a waiver. Your attorney can provide guidance on how to approach this.

Preparing to file for Chapter 13 bankruptcy involves thorough financial assessment, legal preparation, and understanding the long-term implications of your decision. By carefully completing these preparatory steps, you can ensure a smoother bankruptcy process and set the foundation for a successful financial restructuring under Chapter 13.