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This page contains general information about Chapter 13 of the U.S. Bankruptcy Code.
While this information is accurate as of the date of publication, it should not be cited or relied upon as legal
authority. This information should supplement, not substitute for advice of competent legal counsel. If you have
a question or want to know if bankruptcy is the right choice for you call me at (314)353-0834 or us my online form and I assess your case for free if you live within the Eastern District of Missouri. To see a list of all
counties within the eastern district of Missouri click here.
Basic Information
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Summary
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Chapter 13 bankruptcy is designed for individuals with regular income who are temporarily unable to pay their debts but who have sufficient income to pay their debts in
installments over a period of time. In Chapter 13, the debtor files a plan with the court to repay creditors, in full or in part, over a three to five year period. The court
must approve the debtor's plan. The debtor makes monthly payments to an impartial Chapter 13 trustee who distributes the payments to creditors. At completion of all payments,
the debtor receives a discharge of most debts, including some debts that are not discharged in Chapter 7. Unlike Chapter 7, Chapter 13 also permits the debtor to retain
possession of all property, whether or not it is exempt, and allows the debtor to cure defaults and stop foreclosures or repossessions by making payments through the plan.
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Filing
Chapter 13
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A Chapter 13 case begins with the filing of a petition. Generally, the petition is filed with the bankruptcy court for the area where the debtor lives. Along with the
petition, the debtor must file a list (matrix) containing the names and addresses of all creditors. Only an individual, or a husband and wife, who have regular income and who
owe less than $290,525 in unsecured debt and $871,550 in secured debt, may file Chapter 13. The filing fee for Chapter 13 is $194.00. The fee must be paid by cash, money
order, or with an certified check at the time of filing. On written request, the court may grant permission to pay the fee in installments, including payment through the
Chapter 13 plan.
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Schedules & Statement of Affairs
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The debtor must also file bankruptcy schedules and a statement of financial affairs. These documents disclose the debtors financial condition and should be filed with the
petition. If these documents are not filed with the petition, they must be filed within 15 days of the petition or the case may be dismissed. The petition,
schedules and statement of financial affairs are part of the Official Bankruptcy Forms. Official Forms can be purchased at an office supply store or may be downloaded from the
Courts Internet site, www.moeb.uscourts.gov. These forms are NOT available at the Court.
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Chapter 13 Plan
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Within fifteen days of the petition, the debtor must also file a Chapter 13 plan and plan summary and a certificate of service showing that the debtor mailed the plan to the
Chapter 13 trustee and to all creditors on the matrix. The plan must provide for payment of a fixed amount to the trustee on a regular basis. In this jurisdiction, the court
requires a minimum monthly payment of $75.00. Payments must continue for three to five years. The Bankruptcy Code and Local Rules specify how certain types of claims must be
treated. For example, some debts, such as most taxes, alimony and support claims must be paid in full; others may receive partial payment, and still others (such as home
loans) cannot be modified. This court generally requires payment of at least 10% to unsecured creditors. Because drafting a Chapter 13 plan requires familiarity with many
rules and procedures, debtors are encouraged to seek legal assistance from an attorney. Attorney fees may be paid in installments through the plan.
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Confirmation
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The court must approve all Chapter 13 plans. There are three principal requirements for approval. First, the plan must treat claims as required by the Bankruptcy Code and Local
Rules. Second, the plan must pay creditors at least as much as they would have received in Chapter 7, and third, the debtor must devote all of his or her "disposable
income" to payments under the plan. "Disposable income" is the amount of money left over after the debtor pays necessary living expenses. The trustee or
creditors may object if the plan does not meet the requirements for confirmation.
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Plan Payments
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Within thirty days of filing the plan, even if the court has not yet approved ("confirmed") the plan, the debtor must start making payments to the trustee. Most
debtors file a motion to have the court issue a wage order directing the debtors employer to send a portion of the debtors paycheck directly to the trustee each month. Once
the plan is confirmed, it is the debtors responsibility to complete the plan.
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Claims
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The trustee will pay only those creditors who have filed a proof of claim. At the beginning of the case, creditors will receive a notice advising of the bankruptcy, the meeting
of creditors, and the deadline for filing a proof of claim.
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Discharge
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With limited exceptions, such as for alimony, child support, student loans, criminal fines, and certain long-term debts (home loans), the debtor is discharged from all debts
provided for in the plan upon completion of all plan payments. In very limited circumstances, a debtor may receive a "hardship discharge" before completing all plan
payments.
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Chapter 13 Rights and Restrictions
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In Chapter 13, unlike Chapter 7, the debtor may cure a default on a long-term debt secured by the debtors home by making payments over a reasonable period of time through the
plan. The debtor may satisfy other secured debts (such as car loans) by paying the value of the collateral with interest over time. While a Chapter 13 case is pending,
however, the debtor may not incur significant new debt or seek to sell substantial assets without court approval. Additionally, if the debtors income or expenses change
significantly, the debtor may have to file an amended plan. All future tax refunds must be paid to the plan.
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Automatic Stay
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As with all bankruptcy petitions, the filing of Chapter 13 bankruptcy operates as an Automatic stay." As in Chapter 7, the automatic stay prohibits action against the
debtor and the debtors property. However, in Chapter 13, creditors are also prohibited from pursuing a co-debtor. The "co-debtor" stay protects an individual who is
jointly liable with the debtor on a consumer loan.
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Meeting of Creditors
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Within 20 to 50 days of filing the petition, the Chapter 13 trustee will hold the meeting of creditors.The debtor (both husband and wife in a joint case) must attend, and
failure to do so may result in dismissal of the case. The purpose of the meeting is to allow the trustee and creditors to ask questions regarding the debtor=s financial
affairs and proposed Chapter 13 plan.
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Dismissal and Conversion
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The debtor may voluntarily dismiss the Chapter 13 case or may convert to Chapter 7 at any time. A $15.00 fee is required for conversion. If the debtor fails to make plan
payments, the court will ordinarily dismiss the case on motion of the trustee or a creditor.
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Filing Requirements
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On the Date of Filing:
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- Fee $194.00 (cash, money order, certified or attorney's check)
- Voluntary Petition
- Creditor Matrix
- Verification of Creditor matrix
- Motion and Wage Order (if desired)
- B21 Form
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On or within 5 days of the Petition Date:
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- Attorney Compensation Disclosure Statement (if case is filed by an attorney)
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On or within 15 days of the Petition Date:
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- Summary of Schedules
- Schedules A - J
- Signed Declaration concerning Schedules
- Statement of Financial Affairs w/signed Declaration
- Chapter 13 Plan and Plan Summary (First payments due within 30 days of Petition)
- Attorney Fee Election Form
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If you wish to receive a file stamped copy of any document you file, please provide an additional copy and self-addressed, stamped return envelope at the time of filing.
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Instructions for Preparing Creditor Matrix
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The list of creditors (matrix) must comply with the following guidelines to be utilized by the Court's scanner.
1. Lists must be typed using standard typeface (Courier) in 10-point font, justified left and typed in a single column. The list should appear on only one side of the page.
2. There must be at least a one inch margin from the left and right edges of the paper and a one inch margin from the top and bottom.
3. Each name/address must consist of no more than five lines, typed single space, with at least one blank line between each entry.
4. Each line may contain no more than 40 characters.
5. Do not put account numbers or other notations in the address entry.
6. Do not use all capital letters.
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Sample Matrix:
Household Finance
P. O. Box 1000
Anytown, MO 66809
Jane Doe
10345 Main St.
St. Louis, MO 63101
Mercy Hospital
1234 Center Ave.
Yourtown, MO 64102
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The foregoing is very basic information. A Chapter 13 case can involve many other issues. The Bankruptcy Court recommended the use of competent legal counsel.
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