Depending on your income level, Chapter 13 lasts either three or five years. The filing usually stays on your credit record for an additional two to four years.

A lot happens during these time periods. As soon as debtors file their voluntary petitions, bankruptcy’s Automatic Stay usually takes effect. Section 362 of the Bankruptcy Code prohibits all forms of creditor harassment, from collections calls to vehicle repossession. At the end of the bankruptcy, the judge discharges the most unsecured debts, such as credit cards and medical bills.

During the in-between time, debtors make monthly payments to erase secured debt delinquency, like past-due mortgage payments. The monthly amounts are based on the debtor’s income. So, moneylenders cannot demand immediate repayment. They must wait in line like everyone else.

A Georgia bankruptcy attorney not only guides debtors through the entire process. Our professional team also gives debtors the tools they need to put their financial problems in their rear-view mirrors.

Qualifying for Chapter 13

All consumer debtors, whether they file Chapter 7 or Chapter 13, must complete a pre-filing credit counseling class. Most debtors take this class online. 

Later, all debtors must complete a debt management class. Typically, the trustee (person who oversees the bankruptcy for the judge) sponsors free debt management seminars. These events are normally rather dull, but there is usually a nugget or two of valuable information.

Chapter 13 is the only section of the Bankruptcy Code with debt limits. The filer’s secured debt, including both current and past-due amounts, must be less than $1.4 million. Unsecured debts cannot exceed $400,000.

Finally, the debtor must have sufficient monthly income to fund a debt consolidation payment. To estimate this payment amount, add your secured and unsecured debt arrearage and divide it by thirty-six. Your actual payment could be higher or lower.

A Georgia bankruptcy lawyer usually takes care of all these qualifying steps, with the possible exception of the debt consolidation payment amount, during your initial consultation. If necessary, a Georgia bankruptcy lawyer can make an emergency filing the same day, in many cases.

Filing the Petition and Schedules

The best practice is to file all financial information together. That approach minimizes the chances of error. This part of the process could take anywhere from a few days to a few weeks, depending on the case’s complexity. The complete bankruptcy package includes:

• The petition, which contains personal information,
• Schedules, which contain financial information, and
• Declarations, which include (wait for it) declarations.

As mentioned, the Automatic Stay usually takes effect at this point. Also at or around this point, the petitioner must make the initial debt consolidation payment.

Georgia Bankruptcy Lawyers and the 341 Meeting

About six weeks thereafter, the petitioner must attend a financial conference. Although it’s called a “meeting of creditors,” the only participants are the debtor, the debtor’s Georgia bankruptcy lawyer, and the trustee.

The trustee meeting in Chapter 13 serves a dual purpose. First, the trustee verifies the petitioner’s identity and reviews some basic financial documents, such as recent pay stubs and tax returns. If the trustee has any concerns, the trustee might request additional information.

Perhaps most importantly, the trustee verifies the monthly debt consolidation payment amount. Essentially, the trustee places the debtor on an allowance for either three or five years. After the debtor pays basic monthly bills, all disposable income goes toward debt consolidation.

The Protected Repayment Period

It is very important to timely make the debt consolidation payment. Frequently, the trustee sets up a monthly ACH withdrawal. If a payment is late, the trustee could ask the judge to dismiss the case. If that happens, the Automatic Stay lapses, and it is not easy for a Georgia bankruptcy lawyer to restart it.

Three or five years is a long time. If the debtor’s financial circumstances change, it’s usually possible to modify the payment amount, as long as the new amount still meets legal requirements. Changed financial circumstances usually mean things that are beyond the debtor’s control, like a temporary job loss.

As a fallback, the petitioner has the absolute right to convert to Chapter 7 at almost any time. That conversion means no more debt consolidation payments and a faster path to unsecured debt discharge.

Work with a Diligent Attorney

Chapter 13 usually takes either three or five years. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. Convenient payment plans are available.