What is the role of the filed attorney in a chapter 13 case?

March 28, 2008

The filed attorney performs the following functions in a typical chapter 13 case:

  1. Examining the filed financial situation and determining whether chapter 13 is a feasible alternative for the debtor, and if so, whether a single or a joint case should be filed. 
  2. Assisting the debtor in the preparation of a budget 
  3. Examining the liens or security interests of secured creditors to ascertain their validity or avoidability, and taking the legal steps necessary to protect the filed interest in such matters. 
  4. Devising and implementing methods of dealing with secured creditors. 
  5. Assisting the debtor in devising a chapter 13 plan that meets the needs of the debtor and is acceptable to the court. 
  6. Preparing the necessary pleadings and chapter 13 forms. 
  7. Filing the chapter 13 forms and pleadings with the court and paying, or providing for the payment of, the filing fee. 
  8. Attending the meeting of creditors, the confirmation hearing, and any other court hearings required in the case. 
  9. Assisting the debtor in obtaining court approval of a chapter 13 plan. 
  10. Checking the claims filed in the case, filing objections to improper claims, and attending court hearings thereon. 
  11. Assisting the debtor in overcoming any legal obstacles that may arise during the course of the case. 
  12. Assisting the debtor in obtaining a discharge upon the completion or termination of the plan.

The fee charged by an attorney for representing a debtor in a chapter 13 case must be reviewed and approved by the bankruptcy court. This rule is followed whether the fee is paid to the attorney prior to or after the filing of the case, and whether it is paid to the attorney directly by the debtor or by the chapter 13 trustee. The court will approve only a fee that it finds to be reasonable.

May a self-employed person file under chapter 13?

March 28, 2008

Yes. A self-employed person meeting the eligibility requirements listed in the answer to Question 18 above may file under chapter 13. A debtor engaged in business may continue to operate the business during the chapter 13 case.

What happens if a debtor is unable to complete the chapter 13 payments?

March 28, 2008

A debtor who is unable to complete the chapter 13 payments has three options:


  1. dismiss the chapter 13 case,
  2. convert the chapter 13 case to chapter 7, or
  3. if the debtor is unable to complete the payments due to circumstances for which he or she should not be held accountable, close the case and obtain a partial chapter 13 discharge as described in the answer to Question 6 above.

When should a husband and wife file jointly under chapter 13?

March 28, 2008

If both spouses are liable for any significant debts, they should file jointly under chapter 13, even if only one of them has income. Also, if both of them have regular income, they should file jointly.

What if the debtor later decides to discontinue the chapter 13 case?

March 28, 2008

The debtor has the right to either dismiss a chapter 13 case or convert it to chapter 7 at any time for any reason. However, if the debtor simply stops making the required chapter 13 payments, the court may compel the debtor or the filed employer to make the payments and to comply with the orders of the court. Therefore, the debtor who wishes to discontinue a chapter 13 case should do so through his or her attorney.

May a husband and wife file jointly under chapter 13?

March 28, 2008

A husband and wife may file jointly under chapter 13 if each of them meets the requirements listed in the answer to Question 18 above, except that only one of them need have regular income and their combined debts must meet the debt limitations described in the answer to Question 18 above

What should the debtor do if he or she moves while the case is pending?

March 28, 2008

The debtor should immediately notify the bankruptcy court and the chapter 13 trustee in writing of the new address. Most communications in a chapter 13 case are by mail, and if the debtor fails to receive an order of the court or a notice from the chapter 13 trustee because of an incorrect address, the case may be dismissed. Many courts have change-of-address forms that may be used if the debtor moves.

Who is eligible to file under chapter 13?

March 28, 2008

Any natural person may file under chapter 13 if the person

  1. resides in, does business in, or owns property in the United States, 
  2. has regular income, 
  3. has unsecured debts of less than $250,000, 
  4. has secured debts of less than $750,000, 
  5. is not a stockbroker or a commodity broker, and 
  6. has not been a debtor in another bankruptcy case that was dismissed within the last 180 days on certain technical grounds. A person meeting the above requirements may file under chapter 13 regardless of when he or she last filed a bankruptcy case or received a bankruptcy discharge. Corporations, partnerships and limited liability companies may not file under chapter 13.

What if the debtor incurs new debts or needs credit during a chapter 13 case?

March 28, 2008

Only two types of credit obligations or debts incurred after the filing of the case may be included in a chapter 13 plan. These are: (1) debts for taxes that become payable while the case is pending, and (2) consumer debts arising after the filing of the case that are for property or services necessary for the debtor’s performance under the plan and that are approved in advance by the chapter 13 trustee. All other debts or credit obligations incurred after the case is filed must be paid by the debtor outside the plan. Some courts issue an order prohibiting the debtor from incurring new debts during the case unless they are approved in advance by the chapter 13 trustee. Therefore, the approval of the chapter 13 trustee should be obtained before incurring credit or new debts after the case has been filed. The incurrence of regular debts, such as debts for telephone service and utilities, do not require the trustee’s approval.

How are cosigned or guaranteed debts handled under chapter 13?

March 28, 2008

If a cosigned or guaranteed consumer debt is being paid in full under a chapter 13 plan, the creditor may not collect the debt from the cosigner or guarantors. However, if a consumer debt is not being paid in full under the plan, the creditor may collect the unpaid portion of the debt from the cosigner or guarantors A consumer debt is a nonbusiness debt. Creditors may collect business debts from cosigners or guarantors even if the debts are to be paid in full under the debtor’s plan.

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