Chapter 13 Definition

• Chapter 13 is also known as "debt repayment" and is one of the most common types of bankruptcy filing for individuals. In a Chapter 13 filing, you need to present a plan before the court outlining how you would repay your creditors if you had the opportunity to do so at lower interest rates. If you receive a discharge of your debts by the court, you have a period of five years in which to put your plan into practice and repay your creditors. However, the process of filing for Chapter 13 is a lot shorter than the five-year period you have to repay your creditors.
  
  

Petition

• The duration of the process of filing for Chapter 13 depends upon various factors and spans the time from the moment you file a petition to the moment the court gives you a discharge of your debts. If you count the requirements you must meet to be able to file, add 180 days to the total process, since you are required to receive credit counseling within 180 days before you file. Once you have done this, you must present your petition before the court. Include in your petition all of your personal documents plus your debt documents, documents of any assets you might possess and your repayment plan. Once the court has these documents, it can start handling your case.
  
  

Meeting

• From 20 to 50 days after you have filed your petition with the court, a trustee will hold a meeting of creditors. You must attend this meeting and answer questions about your financial situation and the terms of the plan you have presented. This meeting helps to resolve any problems that might exist in your plan and avoid future issues by making sure that the petition and plan are complete and accurate. No later than 45 days after this meeting, you can go to court for a hearing on your repayment plan.
  
  

Discharge

• The court will call for a hearing within 45 days after the creditor meeting. You will then receive a 25 days' notice of the hearing. You need to start making payments to the trustee according to your plan even if your plan has not been accepted yet. Once the court accepts your plan, the trustee will start making distributions of your payments to each of your creditors. If your plan has not been accepted, the trustee will return the funds to you. If your plan is accepted, every payroll you receive will be discounted for the amount you are required to pay. After the completion of your payments for three or five years (depending on the court's decision), you will finally receive a discharge of the debts you have paid.
  
  

Considerations

• The period of time for the entire Chapter 13 process from filing to discharge rounds to three to six years (including the filing process and the repayment). However, the preliminary steps of the filing process -- everything you do prior to the period in which you must wait for your discharge -- is reduced to a matter of months that comprise the time that passes from the moment you filed the petition to when the hearing is called.