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What Happens When You File for Chapter 13 Bankruptcy?

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Regardless of what bankruptcy chapter you choose, you will have to set up an informal meeting with creditors to figure out a repayment plan. The details of this meeting are what sets Chapter 13 apart from the other bankruptcy chapters.

The proceedings will determine whether the bankruptcy court accepts your plan and approves the file or not. Hiring a good bankruptcy lawyer in Salt Lake City will save you time and help you present an acceptable proposal.

You don’t want to spend months doing a back and forth just because your plan had some technical mistakes.

Chapter 13 Bankruptcy Doesn’t Liquidate

Unlike chapter 7 that sells your assets and uses the money to settle debts, chapter 13 focuses on coming up with a repayment plan that will help you catch up with the debt. The plan will either repay a portion of the debt or clear everything and must be deemed fair by the bankruptcy court.

The agreed upon amount is paid to a trustee who then distributes the funds to different creditors. The repayment plan must be sustainable since defaulting it will land you in more trouble.

Most attorneys will want to submit it the day they are tendering the bankruptcy petition. You can present the plan later as long as it is within the 14-day window.

The 341 Meeting with the Creditors

Businesspeople in a meetingThe meeting with creditors will happen within six or eight weeks of submitting your repayment plan to the court. The informal meeting takes place in the trustee’s office. At this stage, you will have to explain your repayment plan and address any questions present creditors raise.

If the creditors find your plan shaky or don’t find it fair, they can file an objection to the sections they don’t find agreeable. The fact that creditors aren’t required to attend this meeting means that sometimes, you might end up discussing the plan with just a handful who will most like endorse your plan especially if you drafted it with the help of a professional.

The Confirmation Hearing

After meeting the creditors and if there is no objection to the payment plans, you will be slotted in for a confirmation hearing before a bankruptcy judge. The judge reviews the payment plan with the intent of ruling if it is feasible or not.

Your bankruptcy attorney explains why the plan is fair and sustainable with regard to your current financial situation. He or she can also argue against proposed repayment plans in case one of your creditors didn’t find your own proposal acceptable.

The judge will confirm, accept amendments or reject your proposal depending on the proceedings of this sitting.

If the judge endorses your plan, your repayment efforts should start immediately. If it doesn’t go through, you will have to come up with a modified plan and schedule another hearing to ratify the modifications.

If you cannot come up with a feasible plan, the court has the option of dismissing the chapter 13 bankruptcy case. This is why you need a professional bankruptcy lawyer to guide you through the application process.

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