Declaring bankruptcy is not an easy decision to make. It happens when a person or a company fails to pay back its financial obligations to creditors. Some individuals believe that bankruptcy is the only way for them to stay out of debt.
One of the common types of bankruptcy is Chapter 13. It is also called the wage earner’s plan. If you decide to declare bankruptcy under this chapter, you will be given a period of three to five years to pay back and reorganize your existing debts to the creditor. This chapter does not require liquidation of assets. Hence, you will have the chance to save your assets such as a house or car from foreclosure. Moreover, you will be protected from co-signers and third parties who are accountable to the borrower toward unpaid consumer debts.
A designated Chapter 13 trustee will guide you throughout the whole bankruptcy process. He or she needs to carry out specific duties and obligations as you file for bankruptcy. Your United States trustee acts as the mediator between you and any creditor concerned.
The first task that needs to be done is to review your bankruptcy paperwork. It should comply with the bankruptcy rules. The bankruptcy trustee must cross-check your Chapter 13 bankruptcy repayment plan. He or she will help you in restructuring your plan since it needs to be fair for both the creditor and the debtor. It should explain how you plan to repay your debts. The trustee needs to check all the bankruptcy forms that you have filed from the start of the case. He or she needs to ensure the accuracy of all the figures declared in those forms. You need to provide supporting documents such as bank statements, bank account details, tax returns, and most recent payslips. These are needed to confirm your monthly income, personal properties, debts, living expenses, credit score, assets, and liabilities. All these details should be thoroughly checked before proceeding to the next step.
After one month from the bankruptcy filing date, your trustee will set up a 341 meeting with you and your creditors. The queries are usually relevant to your assets, liabilities, income, and other related information about your finances. While under oath, you will be asked several questions regarding your bankruptcy plan and paperwork. If there is a need for further verification, the trustee will organize another meeting.
If the United States bankruptcy court will not approve your bankruptcy petition, you will be given a time frame to make amendments to your plan and to correct the conflicts. Your trustee will be responsible to oversee bankruptcy hearings. He or she will ensure the feasibility of your plan and will negotiate with the judge. After the confirmation hearing, the bankruptcy judge will decide whether your plan should be approved or denied.
Furthermore, the trustee is also liable to object to any fraudulent claims. Within 70 days from the filing date, a creditor will submit a “proof of claim” to court. This proof declares the total amount that you owe. Your trustee needs to ensure that this claim is sufficiently supported by legal documents.
Another duty of a trustee Is to collect and manage the repayment plan. You need to give monthly payments to your trustee 30 days from the date of filing Chapter 13. Once you obtain the court order confirming the approval of your plan, the collected fund will be distributed by your trustee to pay your creditors. This will be done according to the terms and conditions of the payment plan. He will help you during the process of debt settlement. This bankruptcy chapter will last for about three to five years. Within this period, the trustee will still collect payments from you and use them to pay off the debts that you owed. All the transactions will be recorded accurately.
Filing for bankruptcy takes a lot of time and effort. It does not happen in a snap of a finger. You might experience hardship and failure. It is a gradual process that will help you solve your financial problems one step at a time. For inquiries and legal bankruptcy advice, do not hesitate to contact us at Northwest Debt Relief Law Firm and schedule a consultation with our experienced bankruptcy lawyers.