New bankruptcy laws implemented in 2005 have caused many debtors to think twice about filing for bankruptcy, thinking the new system makes it harder. But while it takes some getting used to, today’s bankruptcy laws actually make the process safer and more efficient. This is especially true when it comes to filing Chapter 13 or wage earner bankruptcy, as the new bankruptcy laws favor it in several ways. Here’s a quick guide to filing Chapter 13 bankruptcy under current bankruptcy laws.
Bankruptcy laws now require debtors to undergo a credit counseling session before the filing itself. The course can be taken in person, over the phone, or even online, and lasts only about an hour. Make sure to take the course from a center accredited by the bankruptcy courts. You will need to present the certificate of completion along with your other Chapter 13 documents.
The means test requirement was introduced in 2005 to keep debtors from abusing bankruptcy laws. With the means test, the courts can determine whether or not you have the means to pay off your debt, and thus which chapter you should file under. To qualify for Chapter 13 bankruptcy filing, you have to have a regular income that’s enough to make payments under your proposed repayment plan. If your income is below your state’s median, you may have to do a Chapter 7 bankruptcy filing instead.
Next, you will need to fill out the bankruptcy forms needed for Chapter 13. You can get this from your local bankruptcy court or the U.S. Courts website. There are several forms available, but you may not need all of them for your Chapter 13 case. Your bankruptcy attorney can help you find the forms you need according to new bankruptcy laws, and fill them out as accurately as possible.
The 341 meeting is where you and a bankruptcy trustee discuss the bankruptcy terms with your creditors. They also verify your financial information and reach an agreement on your repayment plan. This is usually scheduled about a month after your Chapter 13 bankruptcy filing, and lasts around five to ten minutes. You start making payments under the plan shortly after the meeting, and the repayment period lasts three to five years.
In some cases, bankruptcy laws require you to complete a debtor education course before you get discharged. This takes a little longer than the credit counseling course, but can also be taken online or over the phone. Once you present a certificate saying you’ve completed the course, you get a notice of discharge from the court.