Chapter 13 Bankruptcy Timeline
Entering into a Chapter 13 bankruptcy can be a daunting prospect. Unlike a Chapter 7 bankruptcy, which takes a (relatively) quick 3 to 6 months, Chapter 13 bankruptcy is a longer process that requires debtor(s) to submit a debt repayment plan to pay their debts over the course of 3 to 5 years. I am often asked “what is the timeline of a Chapter 13 bankruptcy?” Well, below I have crafted the typical timeline of a Chapter 13 bankruptcy case and included what you can expect each step of the way.
Pre-Filing
Complete Pre-Filing Paperwork
Before a bankruptcy case can be filed, your attorney must collect a great deal of personal and financial information to effectively build your bankruptcy Petition and Schedules. This includes gathering documents such as:
Income statements
Tax returns
Bank statements
Mortgage statements and statements from other financed property such as vehicles or furniture
Retirement Account statements
Given the proper amount of information and documentation, your attorney can build a strong petition and Chapter 13 Plan that will not require revisions or amendments which can cost you time, energy, and money.
Complete Credit Counseling
The first credit counseling course must be completed within 180 days before the filing of your bankruptcy petition from a government-approved institution. These courses cost about $20 on average and take approximately 2 hours to complete either online or over the phone. This course will walk you through the options available to you in dealing with debt.
Signing Your Petition & Chapter 13 Plan
Before you file your Chapter 13 case you must sit with your attorney to review your bankruptcy forms and Chapter 13 Plan to ensure that all the information within these documents are true and correct. Once corrections and edits are made you will sign the documents to certify their accuracy.
Filing Your Chapter 13 Case
After you have reviewed and signed your bankruptcy forms as well as completed credit counseling, your case can be filed! At this time, the Chapter 7 filing fee of $310.00 will be due to the Bankruptcy Court unless you opted to pay your filing fee in installments. In special circumstances the court filing fee may be waived.
As soon as the bankruptcy petition is filed with the court the automatic stay goes into effect which prevents collection actions from creditors. Additionally, a Bankruptcy Trustee will be assigned to your case.
You will also receive a notice of filing your case from the court (also referred to as the 341 Notice). This document includes the date you filed, date of your 341 Meeting of Creditors, and deadlines for creditors to object to the Chapter 13 plan and/or discharge of your case.
Post-Filing
521 Documents – Within 21 days of filing the Chapter 13 Case
Debtors are required to provide the Chapter 13 Trustee with documents including, but not limited to, income statements, bank statements, tax returns, as well as any and checklists/forms required by the Court. These documents are due to the Trustee no later 7 days before the 341 meeting of creditors.
Plan payments begin – Within 25 to 55 days after filing, depending on the date the case was filed
In the Eastern District of California, Chapter 13 plan payments begin on the 25th on the following month of filing. For example, if you filed your Chapter 13 case on January 1st, 2021, your first plan payment would become due on February 25th, 2021. Ongoing plan payments will be due on the 25th of each consecutive month.
341 Meeting of Creditors – Approximately 30 Days After Filing
The 341 Meeting of Creditors is a required meeting with your designated Trustee and any creditors who wish to attend to ask questions regarding the information your provided in your bankruptcy forms and Chapter 13 plan that you will testify to under oath. As intimidating as this meeting may sound, it is relatively pain-free and lasts only about 10-20 minutes.
If it is deemed that the documents or information that you provided is insufficient, the Trustee may continue the meeting for additional documents to be provided or for amendments to be filed.
Pre-Confirmation
Objections to the Chapter 13 Plan – Filed within 7 days after the first 341 Meeting of Creditors
The Trustee and creditors are required to file an Objection to Confirmation of the Chapter 13 Plan within 7 days of the first 341 Meeting of Creditors. The Trustee may do this for many reasons, including plan feasibility issues, not providing for a secured or priority claim, not providing the required 521 documents, as well as many other reasons.
The Objection to Confirmation is a formal hearing that will be heard before the court which the Debtor and/or their attorney are required to respond to timely and attend.
If the issues presented in the Objection to Confirmation are unable to be resolved, the Objection will likely be granted in which case an amended Chapter 13 Plan will need to be filed and set for a formal hearing.
Confirmation of Chapter 13 Plan – Varies
If the Trustee does not file an Objection to Confirmation of the Chapter 13 Plan, the plan is typically confirmed within 30-45 days after the 341 Meeting of Creditors.
Confirmation of the Chapter 13 Plan can vary greatly if an Objection is filed, especially if the first plan is denied. Some Objections require minor, but important, changes that require a simple amendment to the Chapter 13 Schedules or an inclusion in the Order Confirming Plan. However, other objections can be much more complicated and can take months to settle, especially if a bankruptcy adversary proceeding is involved.
Complete Debtor Education Course – Within 45 Days After 341 Meeting
Debtor Education course is the second and final course required to be completed before discharge of your case can be considered. You are required to file the course completion certification within 45 days of the 341 Meeting. As with the Credit Counseling course, this course can be taken online or over the phone. You may take this course at any government-approved institution. However, we suggest you take the course at the same institution that you took Credit Counseling.
Length of the Chapter 13 Plan – Between 36 to 60 months
The term of a Chapter 13 Plan is a minimum of 36 months and up to a maximum of 60 months. The length of your plan depends upon a number of factors. The major factor is whether your monthly income is above or below the median income in your district which is determined by the Federal Means Test (this calculation is part of your bankruptcy schedules filed with your case).
If you are below the median income, then your plan term is only required to be 36 months. However, your plan term may need to be greater than 36 months in order to pay all required debts in full. If you are above the median income, then your plan term is required to be the maximum of 60 months.
Post-Confirmation
Modifying the Chapter 13 Plan
There are many reasons why a modification of the Chapter 13 Plan may be required. For example, reduction in income due to job loss or serious illness may require you to restructure the Chapter 13 plan. Additionally, you may decide to sell or refinance your home.
If you and your attorney decide that a plan modification is needed, a formal hearing will need to be set for the Chapter 13 Trustee and Judge to approve the modified plan.
Completion of Chapter 13 Plan Payments – 37 to 61 months after filing
After all payments have been made under the terms of your Chapter 13 Plan, the Trustee will file a Notice of Completed Plan Payments which will allow you to cease payments to the Trustee.
Chapter 13 Trustee’s Final Report and Accounting – Within 60 days of Notice of Completed Plan Payments
Once you have made all Chapter 13 plan payments and the Trustee has paid creditors under the terms of your plan, the Trustee will file “Final Report and Accounting” which details the amounts paid into the plan by the Debtor and the exact amounts disbursed to creditors. Parties of interest may object to this report, including creditors who have determined that they did not receive what was owed to them under the plan. If a creditor or interested party deems that an objection is warranted, they will have 30 days to do so.
1328 Declaration
After the Notice of Completed Plan Payments is entered, the court will provide you with the 1328 Declaration to complete and file with the court. This form asks specific questions about your Chapter 13 case including the what exemptions were used and the total dollar amount of debts in your case. It is highly suggested that your meet with your attorney to properly fill out this form.
Failure to file this document will result in the closure of your Chapter 13 case without a discharge.
Notice of Intent to Enter Discharge – About 5 Months of Notice of Completed Plan Payments
If no objections to the Trustee’s Final Report are filed and the 1328 Declaration is filed with the court, the court will notify parties involved in your case that the Chapter 13 case will be entering a discharge. Parties of interest will have 14 days to object to this notice.
Discharge of the Chapter 13 Case – About 66 Months After Filing the Chapter 13 Case
A Discharge is an Order from the Bankruptcy Court that is granted upon the successful completion of the Chapter 13 case. Once the Order of Discharge has been entered qualifying secured, priority, and unsecured debts will be discharged and can no longer be collected upon.
Post-Discharge
Once a Chapter 13 case is discharge there may be additional matters that need to be attended to be followed up on. This may include making sure a second mortgage or other junior lien has received a full reconveyance if it was stripped through the Chapter 13 plan. Other matters include obtaining a cart title or pink slip if a vehicle was paid in full through the plan.