Chapter 13 Payment Plan in Western Washington Puget Sound area, including Seattle, Bellevue and Federal Way

Chapter 13 bankruptcy allows an individual to consolidate his or her debt while paying off some past-due and current debts. If your income meets or exceeds the mean's test (discuss the test with an attorney) then the payment period for a Chapter 13 plan must be 5 years, instead of 3 years unless the plan pays all claims in less than five years. A Chapter 13 case allows an individual to keep valuable property which could otherwise be foreclosed upon or repossessed, if monthly payments are made according to the payment plan accepted in the bankruptcy proceeding. The amount of the monthly payment and the length of the repayment plan is based upon the following factors:

• Monthly income of the person
• Monthly expenses of the person
• Amount and nature of the debt

The most common uses of Chapter 13 involve:

• Repayment of mortgage arrears (back amounts owed) home
• Restructuring of auto loans to save a vehicle
• Secured debts are paid 100% on the dollar, while unsecured debts may be paid less than 100% on the dollar. A person receives a discharge under Chapter 13 at the completion of the payment plan.

QUESTIONS

When do I get my discharge?
After completion of the payments under the Chapter 13 Plan that has been confirmed by the Bankruptcy Court.

What role does the Chapter 13 Trustee play in the case?
The Chapter 13 Trustee performs many roles. The Trustee serves as a disbursing agent for payments under the plan. The Trustee examines the debtor at the meeting of creditors and is actively involved in the certification process. The Trustee can also object to confirmation of the plan and makes a determination in each case whether the debtor has satisfied the "disposable income test" and the "best interest of creditors test." If either of the tests is not met, it is the Trustee's duty to object to confirmation. The Trustee can also file a motion to dismiss the Chapter 13 case for a "bad faith filing" or for failure to make payments called for by the plan.

What is the meeting of creditors and what happens?
The meeting of creditors is a scheduled meeting conducted by the Chapter 13 Trustee where the debtor is examined under oath concerning his assets and debts. Creditors who choose to attend the meeting either in person or through their attorney can ask questions concerning anything relevant to the case. As a practical matter, creditors rarely attend the meeting of creditors. The average meeting of creditors lasts about 3 to 5 minutes. It is mandatory for all debtors to attend the meeting of creditors. If you retain an attorney, the attorney will accompany you to the hearing.

Do I have to list all of my creditors?
Yes. Bankruptcy law requires a full and complete disclosure to whom the debtor owes money. Bankruptcy schedules are signed under the penalty of perjury and the debtor will be asked under oath at the meeting of creditors if all debts were disclosed.

Can I transfer ownership of my home, car, boat, collectibles, tools, etc. to someone else to keep these items out of bankruptcy?
No. Such transfers will almost invariably violate 11 U.S.C. §548 of the Bankruptcy Code. The Chapter 13 Trustee has the power to set these transfers aside. The Trustee can also ask for the case to be dismissed for a "bad faith filing." Moreover, federal law could be invoked to initiate criminal proceedings based on bankruptcy crimes.

Are certain debts dischargeable in Chapter 13 that are not dischargeable in Chapter 7?
Yes. Credit card fraud, embezzlement, larceny, defalcation, conversion, and certain IRS debt owed by non-filers can be discharged in Chapter 13. Alimony, child support, student loans (most but not all), personal injury in DUI cases and certain IRS debt are not dischargeable in Chapter 13.

Can the Trustee or a creditor object to confirmation of a Chapter 13 Plan?
Yes. It is the Trustee's responsibility to object to Chapter 13 Plans that are deficient. A creditor may also object, but generally most objections will come from the Chapter 13 Trustee. Most objections are worked out or resolved prior to the confirmation hearing but occasionally the court has to take evidence and rule.

How long does a Chapter 13 remain on a credit bureau report?
Seven years. However, credit can be reestablished after the Chapter 13 discharge (3 to 5 years) and it is not necessary to wait 7 years. The significance of the 7 year period is that the reference to bankruptcy will be deleted from the public records section of your credit report after 7 years.

What is a co-debtor stay?
If the joint debt is a consumer debt (secured or unsecured) and the plan proposes to pay the debt in full, the creditor is blocked by the Chapter 13 filing from taking collection action against the non-filing co-debtor.

Contact the Law Offices of Timothy J. Wilson at:
(206) 381-3210 or (253) 874-5826.

Note: The above-discussion is only a brief statement regarding the laws of a chapter 13 bankruptcy. If you are considering filing for bankruptcy, it is highly recommended that you consult an attorney regarding your specific situation to determine whether bankruptcy is appropriate, and if so, whether a chapter 7 or chapter 13 bankruptcy is recommended.