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Frequently Used Terms in Chapter 13 Bankruptcy Cases

People who file Chapter 13 bankruptcy petitions have the advantage of retaining personal and real property while paying off their debt through an affordable plan. Some people use Chapter 13 as a way to save their homes from foreclosure or their automobiles from repossession. Other people seek to restructure secured debt (other than their homesteads) and extend repayments over three to five years. Protection is extended to co-debtors as the Bankruptcy Code also prohibits creditors from taking collection actions against them.

The process of filing a Chapter 13 involves the disclosure of all your debts. Unlike in a Chapter 7 case, the Bankruptcy Code does not require you to complete the means test. However, you must show that you have adequate income to pay your creditors.

Some commonly used bankruptcy terms you may encounter include:

  • Statement of financial affairs — Lists your sources of income, debts, property transfers and lawsuits initiated by your creditors. You must file the completed questionnaire concerning your finances when you file your bankruptcy petition.
  • Chapter 13 plan — Provides details of your plan to repay your creditors over a specific period of time.
  • Bankruptcy estate — Shows real and personal property that you own at the time you file for bankruptcy. This can also include property that another person is holding for you.
  • Trustee — A person appointed by the court to review your bankruptcy petition, schedules and repayment plan. The trustee also ensures that you calculated your income accurately and that you listed reasonable expenses. The trustee may file objections to your repayment plan or to creditor’s proof of claims. If necessary, the trustee can initiate legal proceedings against you or creditors to recover bankruptcy property.
  • Credit counseling — Anyone who files for bankruptcy relief must complete credit counseling courses in order to receive a discharge. You must take one course, prior to filing. After filing, you must take a second course about personal financial management to receive a discharge.

The technical requirements for filing bankruptcy can be confusing. Contact an experienced bankruptcy attorney to learn about your options and rights.

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