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During this meeting, the trustee places the debtor under oath, and both the trustee and creditors may ask questions. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the creditors' meeting.
If a husband and wife file a joint petition, they both must attend the creditors' meeting and answer questions. In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors.
Unless the court grants an extension, the debtor must file a repayment plan with the petition or within 14 days after the petition is filed. (3) Secured claims are those for which the creditor has the right take back certain property (i.e., the collateral) if the debtor does not pay the underlying debt. If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receive at least the value of the collateral. The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size - and five years if the current monthly income is greater than a family of the same size.
After the meeting of creditors, the debtor, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on the debtor's chapter 13 repayment plan. Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding. The "applicable commitment period" depends on the debtor's current monthly income.
In no case may a plan provide for payments over a period longer than five years. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence.
By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. Unless the court orders otherwise, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs.
Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. This chapter discusses six aspects of a chapter 13 proceeding: the advantages of choosing chapter 13, the chapter 13 eligibility requirements, how a chapter 13 proceeding works, making the plan work, and the special chapter 13 discharge. There are exceptions in emergency situations or where the U. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling.
If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." (1) If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. If a debt management plan is developed during required credit counseling, it must be filed with the court.
1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8.
Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time.
Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. These amounts are adjusted periodically to reflect changes in the consumer price index.
trustee or bankruptcy administrator (2) appoints a standing trustee to serve in all chapter 13 cases.
The chapter 13 trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors.