While it can be argued that the effort and preparation required in just filing a Chapter 7 case constitutes the majority of the work the debtor needs to perform in its case, the same can hardly be argued about a Chapter 13. After filing, the Chapter 13 debtor has to perform a good bit of work to get its plan confirmed, and then often has obstacles to deal with even after confirmation.
For those of you wondering what happens next? After filing your chapter 13, the initial stages, at least, are not that different from a chapter 7.
The first thing that happens is your attorney files the case electronically (or if you are filing pro se, meaning without an attorney, then you file the case in person at the courthouse), and you get a case number. As part of your filing fee, the court mails out a notice of your filing to you and all your creditors that you included on the creditor matrix. Therefore, within several days of your filing, everyone associated with your case is put on notice that you have filed.
Although the notice is when creditors officially get notice of your case filing and therefore must stop all collection activity against you because of the automatic stay provided to debtors, the automatic stay actually kicks in when the case is filed, not when the creditor receives notice of your filing. Therefore, as soon as you file, creditors cannot: garnish your wages, repossess your car, foreclose on your house, send you letters, call you, etc. Should they attempt to do any of these, even a second after your filing, you should immediately notify them that you have filed and give them your case number.
The notice contains several things of importance. It contains your private information so that creditors can identify you. It also tells you who is your bankruptcy case trustee, as well as the assigned meeting time for your meeting of creditors.
The meeting of creditors is usually set more than 30 days after the filing of the case. Since the debtors first plan payment is due within 30 days of filing, the debtor usually has to make a plan payment prior to the meeting of creditors. Additionally, the debtor should also make the ongoing mortgage payment and continue to pay utility bills and other living expenses.
If the debtor is self employed, a business questionnaire form might need to be filled out by the debtor prior to the 341 hearing and then submitted to the trustee in advance of the hearing. Documents for production might also be required, particularly checking account records.
Whether the debtor is self employed or not, it must turn over tax returns for the last four years to the trustee. So if the debtor has not completed returns for those years, the debtor must do so.
The meeting of creditors, otherwise known as your debtors exam, or 341 hearing, is a chance for the trustee and any creditors to question the debtor. While some exams might be as short as five minutes, others can take as long as 15 to 20 minutes. Self employed debtors typically have longer exams.
The 341 hearing is usually set for about 4-6 weeks after the debtors filing. The time and date is assigned by the court and the debtor cannot request a specific date or time. Should the debtor be unable to make that date or time, the trustee will set a reset date, which the debtor must appear. If the debtor misses the original date and the reset date, the debtors case might very well be dismissed.
The debtor must have picture ID and proof of social security number (a social security card or W-2) present at the meeting. If the debtor does not bring these items, they might not even make it past security (remember, you are probably entering a federal courthouse), and even if the trustee was willing to hold the hearing, the debtor would at a minimum have to reappear to prove social security identity.
At the conclusion of the meeting, the trustee will state its objections to the debtors plan. The debtor must cure these objections prior to confirmation. The easiest and most typical way to resolve these objections is by reaching an agreement with the trustee. The trustees objections are sometimes based on errors in the debtors petition, but other times are just a way to of saying the debtor needs to increase funding.
In addition to the trustee, creditors might also object to the debtors plan. The debtor should try to resolve these objections prior to confirmation. If the debtor and the creditor cannot come to an agreement, the judge will resolve the disagreement at confirmation. This could delay or deny the debtors confirmation.
All throughout the process creditors are filing proof of claims, so they can be paid as part of the trustees distribution of the debtors plan payments. While it may seem counter intuitive, the debtor sometimes wants to file proof of claims on behalf of certain creditors, should they not have filed these claims themselves.
A myriad of things can occur between the 341 and confirmation, as well as between confirmation and discharge. Remember, a chapter 13 is a 36-to-60 month payment plan, so a lot can change in the debtors life over that time. Defending adversary proceedings, defending lift stay motions, filing the financial management certificate and recouping tax refunds from the trustee are just some of the issues debtors might have to address during the pendency of the case.
Thus, it is particularly hard for a debtor to file a chapter 13 pro se and it is highly recommended that anyone considering filing chapter 13 speak with an attorney.
To read what happens after you file your Chapter 7 case, click here.