Are you behind on your mortgage payments? Is a foreclosure sale pending? Do you owe taxes or student loans and cannot make the required monthly minimum payment? Then you may find yourself thinking about bankruptcy. If you intend to save your home then a chapter 13 bankruptcy filing can help you accomplish that goal. A chapter 13 can allow you up to five years to pay off mortgage arrears, back taxes and catch up on student loan payments.
So what should you expect when filing a chapter 13 case? First, you need to provide the same information as you would in a chapter 7 in terms of your financial, assets, creditors and expenses.
Secondly, unlike in a chapter 7, you will propose a repayment plan known as a chapter 13 plan. The chapter 13 plan tells your creditors how you intend to pay them back. For example, if you are paying off mortgage arrears you would list the amount of arrears as of the filing date and make sure the monthly payment is enough to cover those arrears. The plan must also account for the trustee’s commission, the fee charged by the trustee for ensuring your creditors get paid according to the chapter 13 plan. The plan payment may also include attorneys fees.
In addition, just like in a chapter 7, you will also attend something known as a meeting of creditors. This is a hearing under oath where the chapter 13 trustee and creditor’s can question you about your case. Your attorney will prepare you for this hearing. If you read over the scheduled file din your case you should do okay at the hearing.
Unlike in a chapter 7, you have an additional hearing to contend with. A Confirmation Hearing is scheduled in every chapter 13 case in Maryland. A Confirmation Hearing is held to determine whether your Chapter 13 plan should be approved or denied by the Court. But attendance is not mandatory if the case is resolved prior to the hearing. For example, if there are no objection from either the trustee or your creditors, which is rare, your plan can be confirmed without you attending the confirmation hearing.
What are objections, you say? Objections are the vehicles that the chapter 13 trustee or your creditors uses to inform the court why your proposed chapter 13 plan should not be confirmed. Objections to confirmation can arise due to:
- Failure to make payments to the trustee.
- Lack of feasibility (plan payments do not equal the minimum amount needed to be paid to the creditors).
- Failure to provide the trustee with documents
Whenever any of these objections are raised and debtor does not resolve them before the Confirmation Hearing then a hearing is conducted by the judge assigned to the case. The debtor and the party making the objection proceed to make their case as to why the court should rule in their favor.
At the conclusion of the Confirmation Hearing, the Judge can either Confirm or deny Confirmation With Leave to Amend or Without Leave to Amend. When Confirmation is denied it is with leave to amend meaning that the debtor can amend his or her plan and resubmit it for confirmation. Sometimes the confirmation can be denied without leave to amend if debtor has exhausted numerous opportunities to amend and failed to overcome the objections.
This is just a brief overview of a complex issue. Always consult a lawyer before taking action.
Joseph K. Githuku
9407 Harford Rd
Baltimore, MD 21234
Disclaimer: This article is for informational purposes only. No attorney-client relationship is created by this article. Always consult a bankruptcy attorney before taking any action because each case is different.