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The goal in Chapter 13 is to use future income to pay all or a portion of one’s debts through a court approved and administered Chapter 13 repayment plan.  The judge assigned to the case must confirm the plan.  During the confirmation process the creditors are permitted to have some input.  However, once the plan is confirmed, the creditors are obligated by its terms.  See 11 U.S.C. § 1327(a).

Chapter 13 plans typically last either three or five years, with five years being the statutory maximum.  See 11 U.S.C. § 1322(d)(1)(C) and (d)(2)(C).  Each month during the pendency of the plan the debtor sends a plan payment to the Chapter 13 Trustee assigned to the case.  The Trustee in turn sends payments to the creditors according to the terms of the confirmed plan.  At the end of the plan any remaining scheduled unsecured dischargeable debt is discharged.

One attractive feature of Chapter 13 for the debtor wanting to keep collateral securing a debt is the chance to catch up on the payments.  For example, the debtor can use the plan to pay off a mortgage arrearage over the life of the plan, rather than having to immediately become current as in a Chapter 7 bankruptcy.

Another benefit is that the debtor does not have to surrender any nonexempt assets:  the debtor gets to keep everything.  Why?  The short answer is because in the plan the debtor makes monthly payments to pay creditors.  However, as we shall see, the value of the debtor’s nonexempt assets provides a starting point for the size of the monthly plan payments.

How much are the monthly payments?  In order to answer that question we need a little background.  In particular, we must observe that a Chapter 13 plan must satisfy three basic criteria.  These three criteria contain the essence of 11 U.S.C. § 1322.
Continue Reading The Key Requirements Of A Chapter 13 Bankruptcy Plan

The answer differs depending on the nature of the debt and under which chapter the bankruptcy case was filed.

I.          The Key Exception To Discharge

The key provision of the Bankruptcy Code that we use to answer the question is 11 U.S.C. § 523(a)(3), which states (with emphasis added):

A dischargeunder section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt— . . . neither listed nor scheduled under section 521 (a)(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit—

(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request;

If you’re not used to reading statutory language you may naturally ask:  What does all of this mean?  One thing is clear:  this statutory provision concerns debts that were “neither listed nor scheduled” in the bankruptcy papers “in time to permit . . .”  But to permit what?  There are two things that the creditor would have been able to do in a timely fashion if the debt had been properly scheduled, but cannot because of the oversight.
Continue Reading What Happens If I Forgot To List A Creditor In My Bankruptcy Papers?

The popular wisdom says that an individual or a married couple can file for bankruptcy under either chapter 7 to discharge debts without paying them, or chapter 13 to pay back some of the debts through a court-administered, multi-year, partial debt repayment plan, while a business files under chapter 7 if it is going out of business, or chapter 11 if it needs to reorganize.  There is some truth to this wisdom, but it fails to take into consideration the personal chapter 11 bankruptcy.  This post looks briefly at just a few characteristics of personal chapter 11 bankruptcy.
Continue Reading Personal Chapter 11 Bankruptcy