Bankruptcy Debtor
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Filed under Bankruptcy
A Bankruptcy debtor who plans to file under Chapter 13 needs to first file the petition. The petition is a document that asks the court to offer Chapter 13 bankruptcy protection to the debtor. It is a two page form that needs to be signed by debtors as well as the attorney.[br]
Bankruptcy debtors need to file their petition along with the fees. Once a petition is filed, the receiver issues a docket number. Post collecting a docket number, all the collection activities are halted by law.
Actions that Bankruptcy Debtors Need to take Post Petition
Once the petition is filed, the bankruptcy creditors need to submit the list of all their creditors along with their name and addresses. They need to submit a detailed paperwork that mentions schedules of their assets, income, liabilities, financial history and expenses. The paperwork must also have a detailed outline of how the debtors plan to reorganize under Chapter 13. All the claims are to be supported by proofs.
Typically, this completes the process of filing. However, in cases when amendments are required, the debtors can make changes by approaching the bankruptcy court (with some extra charges).
Maintaining Payment: Bankruptcy Debtor
Chapter 13 calls for regular payments. Missing out on payments creates difficulties for debtors. It implies that debtors can be harassed for collection. Therefore, in months where making payments gets tougher, the debtors should maintain transparency and convey their failure to make payments to the trustees.
Bankruptcy debtors should also know that their debt follows a priority based scheme that pays secured creditors before others.[br]
The priority list is mentioned below:
· Secured creditors: These creditors are paid outside the plan and directly. This means that the debtors make payments on the corresponding due dates to these creditors, without keeping the trustee in the loop. Failure on the debtors’ part gives creditors enough ground to pursue foreclosure on the property.
· Unsecured creditors: These creditors are paid inside the plan through the trustee. Debtors make a single payment to the trustee, who in turn, distributes the amount to various creditors.
· Creditors post bankruptcy: This group is paid outside the plan as this debt is not covered by the bankruptcy protection.
Bankruptcy debtors who file under Chapter 13 of bankruptcy should be aware that they need to work towards ensuring their repayments.