It is possible to file for bankruptcy without an attorney, and Chapter 13 cases present more challenges for self-representing filers than Chapter 7 cases. More forms, more calculations, and the repayment plan must be approved by the Chapter 13 trustee and the judge.
Income Forms
Debtors in Chapter 13 must submit one or two forms that together establish the repayment duration and available income for the Chapter 13 repayment plan.
The first form is the Current Monthly Income Statement and Commitment Period Calculation, official form B122C-1. This form calculates the average monthly income and uses this number to determine whether your case should last for three years or up to five years. Simply put, if your household income is below the median for your state, your plan should last only three years. If your household income is above the median, it must last for five years. The median is the point where 50% of families fall above and 50% fall below.
The second form is your Disposable Income Calculation, official form B122C-2. This form calculates the difference between your income and reasonable, necessary monthly expenses. If your income exceeds your expenses, you have disposable income. At least part of this disposable income will be included in your Chapter 13 payment and will be used to pay allowable claims for unsecured debts such as credit cards and medical bills.
While it may be straightforward to determine your income for the first form, there may be room for dispute about whether some expenses are reasonable in the second form. Some are set for you in the calculation, based on national or regional averages, but others may be customized based on your specific circumstances. Obtaining approval from the Chapter 13 trustee for these amounts can be the most challenging part of a Chapter 13 case.
Chapter 13 Plans
Once income and expense calculations are made and the commitment period is established, the repayment plan can be calculated. The repayment plan will include the following amounts:
- The disposable income from official form B122C-2.
- The arrears owed to mortgage creditors.
- Priority debts such as overdue taxes.
- The arrears owed to auto creditors.
- Attorney fees, if paid through the plan.
- Administrative fees for the Chapter 13 trustee.
- The value of non-exempt assets.
In some areas, known as conduit jurisdictions, debtors must pay the full mortgage payment through the Chapter 13 trustee, not just the amount covering the arrears. Conduit payments allow the trustee to maintain accurate records and provide better oversight of the debtor’s progress and adherence to the Chapter 13 plan.
It is possible for your Chapter 13 plan to include the entire car payment in the plan and even adjust the interest rate or the amount of the principal owed if your car loan is at least 2.5 years old at the time of filing for bankruptcy.
Your Chapter 13 plan form can either be the official form or an approved local variation, depending on the state in which the case is filed. These forms can be found on the court’s website or the website of the Chapter 13 trustee assigned to the case.
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Sources:
- United States Courts. “Bankruptcy Basics,” Pages 25-26.
- United States Courts. “Instructions: Bankruptcy Forms for Individuals,” Pages 12, 36.
- United States Courts. “Order With Regard to Fees, Expenses and Costs of Attorneys for Debtors in Chapter 13 Case,” Page 2.
- United States Courts. “Official Form 113 Chapter 13 Plan.”
- American Bankruptcy Institute. “Final Report of the ABI Commission on Consumer Bankruptcy,” Pages 184-186.
- United
- United States Courts. “Official Form 113 Chapter 13 Plan,” Pages 3, 11.
- United States Courts. “Federal Rules of Bankruptcy Procedure,” Pages 51-52.
States House of Representatives. “11 USC 1325: Confirmation of Plan.”
Source: https://www.thebalancemoney.com/filing-bankruptcy-without-a-lawyer-chapter-13-issues-3956219
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