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Details of Chapter 13 bankruptcy and how it works

For Tennessee residents who are experiencing financial challenges, Chapter 13 bankruptcy could be a reasonable alternative to get back on solid financial footing. Before moving forward with filing for Chapter 13, however, it's important to know how the entire process works. The case will start when the individual files a petition with the court. The person filing the petition will also have to inform the court of the following: assets and liabilities; expenditures and current income; executory contracts and unexpired leases; and a statement detailing financial affairs.

There must be a filing of certificates to show that the individual filing has gone through credit counseling and a copy if there was a debt repayment plan created. There must be evidence of being paid by employers - if any were received - 60 days prior to filing for Chapter 13. There must be a statement of net income per month and anticipated raises in expenses or income post-filing. The trustee for the bankruptcy must be provided with tax records.

The debtor is required to provide the following information: a list of creditors the debtor owes, along with the amount owed; how much the debtor earns or receives in pay and how often; a list of property the debtor possesses; and the debtor's living expenses. An impartial trustee will be the administrator of the case. The case will be evaluated by the trustee and the trustee will also disburse the funds to the creditors.

When a Chapter 13 bankruptcy begins, all attempts to collect what is owed by creditors will cease. However, certain actions won't be stopped and the stay might only last for a limited amount of time. Chapter 13 also serves to protect co-debtors, if there are any. The Chapter 13 process can be used to prevent a debtor's home from being foreclosed upon.

Source: USCourts.gov, "How Chapter 13 Works," accessed on Dec. 28, 2014

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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