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Chapter 13 FAQ

March 11, 2022

If you’re facing financial woes, you may be considering Chapter 13 bankruptcy as a form of relief. It’s essential that you are well-informed about this option before making any decisions, which is why we are offering this FAQ.

How Does the Chapter 13 Bankruptcy Process Work?

Chapter 13 Bankruptcy permits a consumer to repay part or all of their debts through a repayment plan with the Bankruptcy Court’s approval. While the plan is legally in place, creditors and debt collectors are typically banned from collecting debts directly from the debtor.

Instead of paying their creditors directly what is owed to them, the debtor pays a pre-determined amount each month of the plan to their Chapter 13 trustee. It’s the trustee’s job to distribute the money to the applicable creditors, as detailed in the Chapter 13 plan. When the trustee receives and distributes the last repayment, the debtor will receive a discharge for the remainder of their dischargeable debts.

What Is the Duration of A Chapter 13 Plan?

Filers who make less than the median income in Missouri can complete a Chapter 13 repayment plan in as little as three years (36 months). However, if their monthly income is more than the median income in Missouri, the plan will usually last for five years (60 months).

Who Is the U.S. Bankruptcy Trustee?

A U.S Bankruptcy Chapter 13 trustee is someone appointed by the Bankruptcy Court to receive the monthly payments from the bankruptcy filer and distribute the money to the creditors as per the Chapter 13 repayment plan. The trustee also administers the bankruptcy case until it is closed. The debtor must always cooperate with their bankruptcy trustee.

How Would Chapter 13 Be Beneficial?

Chapter 13 is the preferred type of bankruptcy for someone who wants to repay most or all of their unsecured debts and whose income is sufficient for them to do so within a reasonable amount of time. Additionally, if the filer has a substantial amount of nonexempt property or a lot of valuable exempt property that secures their debts, it might be lost in a Chapter 7 case. With Chapter 13, they may keep their property. Also, debtors with non-dischargeable debts might not receive a discharge under Chapter 7. Filers with one or more significant debts that may be discharged only under Chapter 13 might opt for Chapter 13 instead of Chapter 7.

When Should You Contact a St. Louis Chapter 13 Bankruptcy Lawyer?

If you are experiencing financial difficulties, the sooner you contact a St. Louis bankruptcy attorney, the better. The longer you wait, the worse your situation might become. Learning about the bankruptcy options available to you as soon as possible serves to benefit you now and in the future, especially if you are facing wage garnishment, vehicle or other property repossession, eviction, or foreclosure.

At AKS Law, our phones are staffed 24/7, so you can call us anytime to schedule a free Chapter 13 bankruptcy case review with our experienced St. Louis bankruptcy attorney. Please call at (314) 740-2989 or contact us online.