Chapter 13 and Chapter 7 are the two most common types of consumer bankruptcy. While Chapter 7 leads to the discharge of most unsecured debt, Chapter 13 bankruptcy is different. Rather than discharging debts, it restructures them into more manageable payment plans designed to be paid off in three to five years. In some cases, any debt that remains once the repayment plan is complete may be discharged, but that’s not the ultimate goal.

Although not required, it’s a good idea to seek assistance from a qualified bankruptcy attorney. Filing Chapter 13 bankruptcy is a multi-step process that can become quite complex for someone with no legal background. And if you file yourself, court employees are prohibited from offering guidance or advice, even if they identify mistakes in your paperwork.

Your experience filing Chapter 13 bankruptcy may vary depending on the laws in your state or local jurisdiction, as well as the circumstances of your individual case. But in general, these are the steps involved in filing Chapter 13 bankruptcy.

Familiarize Yourself with the Process

Make sure you understand the goal of a Chapter 13 bankruptcy is a structured repayment plan, rather than a discharge of unsecured debts. Talk with a financial planner or qualified bankruptcy attorney to see if it’s the right solution for your unique situation.

Go Through Credit Counseling

Most states require bankruptcy filers to complete credit counseling from an approved nonprofit agency like Take Charge America within 180 days before filing. This will help you determine if there are other debt relief options, such as a debt management plan, that can help you avoid filing bankruptcy.

Compile Necessary Documents

Whether you are planning to file on your own or working with an attorney, you’ll need to compile a variety of financial documents. These can include: tax returns, pays stubs, credit card statements, a list of assets and liabilities, bank statements and any current contracts or lease agreements.

Complete Required Forms

Filing Chapter 13 bankruptcy involves thoroughly and accurately completing several forms including the petition, schedules, statements and proposed repayment plan. These forms include relevant details of your financial situation including income, assets, expenses, debts and recent/current financial transactions.

If you are working with an attorney, they will ensure all the paperwork is accurate and complete. If you’re filing on your own, there are document preparers who can help you fill out all the paperwork. But once again, they can’t offer legal advice or assistance, simply administrative help.

File the Forms

After you compile all the necessary information and complete the forms, it’s time to file them with the bankruptcy court in your district. Be aware there will be filing fees; in some cases, the court may set up installment payments or waive these fees entirely depending on financial need.

Trustee Appointment & Automatic Stay

Once you file, the court will appoint an impartial bankruptcy trustee to review your documents, oversee your case and disburse payments to your creditors on the payment plan.

Also, an automatic stay will go into effect. This stay should stop any ongoing creditor collection efforts such as phone calls, texts and social media messages. For those who have been struggling to deal with creditors and collection agencies, the stay provides welcome relief and peace of mind.

Meeting of Creditors

Your trustee is responsible for arranging a meeting with creditors. This meeting will happen 21-50 days following the initial filing. You must attend this meeting and answer questions from both the trustee and creditors regarding your financial situation and proposed repayment plan.

Confirmation Hearing

After the meeting of creditors, you, your trustee and any creditors who choose to attend will return to court for a hearing to confirm the details and terms of the repayment plan. Once the plan is confirmed, you must make every effort to follow the terms of the plan and make all payments on time.

Hardship Discharge

If you find yourself unable to continue making the plan payments due to illness or other circumstances beyond your control, you may qualify for a hardship discharge to eliminate the remaining portion of the debts you owe. You must show proof of hardship and other documentation to file for a hardship discharge.

Long-term Effects

Chapter 13 bankruptcy will stay on your credit report for up to seven years from the filing date. It will initially be challenging to obtain new credit at reasonable rates. But as time passes and you make an effort to build a new, positive credit history, the bankruptcy will have less of an effect.

This is a basic overview of the process to file Chapter 13 bankruptcy. Each filer’s case is unique based on their personal financial circumstances and the district in which they file. A qualified bankruptcy attorney can help you understand and navigate the process to ensure it’s the best choice for your situation.