A Chapter 13 is a most common re-organization type of bankruptcy. Chapter 13 allows debtors to keep their property by re-structuring their secured debts and re-paying them under a court approved plan over 3-5 years. See Chapter 13 Plan. Unlike debt liquidation under Chapter 7, Chapter 13 operates as a debt consolidation loan under which the debtor makes monthly payments to a Chapter 13 trustee who then distributes the payments to the debtor’s creditors. See Key Differences Between Chapter 7 and Chapter 13.

The Chapter 13 bankruptcy is a complex process. A debtor can commence a Chapter 13 case simply by filing a petition along with the appropriate filing fees. The required financial information (schedules) and the proposed Chapter 13 plan may be filed either with the bankruptcy petition or within 14 days of bankruptcy filing. See Chapter 13 Required Documents. The debtor is required to start making plan payments to the trustee within 30 days after filing.

The filing of the petition under chapter 13 stops most collection actions against both the debtor and the non-filing co-debtor. See Co-Debtor Stay. Furthermore, a trustee is appointed to evaluate the case. The trustee will hold a meeting of creditors between 20-40 days of filing. See “341 Meeting”. No later than 45 days after the meeting of creditors, the judge must hold a confirmation hearing to decide if the proposed plan meets all legal requirements. See Confirmation Hearing. If the judge approves the plan, the debtor will perform under the plan and upon completion will receive a discharge. If the debtor is unable to complete the plan, the court may grant the debtor a hardship discharge. If the court does not confirm the plan, the debtor may file a modified plan, convert the case to Chapter 7, or have it dismissed.

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