If you don’t qualify for debt relief under Chapter 7 because you make too much money or had a prior Chapter filing, you may be able to file for Chapter 13 instead, which will reorganize your debt.
You’ll end up proposing a repayment plan for your debts, and you will make that payment monthly to a Chapter 13 trustee who pays your creditors according to the terms in the plan. The amount you’ll pay varies, and only certain debts – like mortgages – may be paid directly while the case is open. For some debts, you may end up paying creditors outside of the plan.
In Arkansas, Chapter 13 can be denied for several reasons, which we’ll go over below.
Why Your Case Could Be Denied
Any of the following could be a valid reason:
- Failing to pay the bankruptcy plan payments
- Failing to meet specific deadlines
- Proposing an illegal repayment plan
- Failing to submit required documentation
- Failing to file annual tax returns plus submission of a copy to the trustee
Other Chapter 13 Denial Factors
The bankruptcy court will appoint a trustee in bankruptcy filings, who shall review the repayment plan to ensure it’s legal. The trustee will also arrange the Meeting of Creditors, which you are required to attend as the filer. While creditors rarely attend, they can object and ask questions regarding your finances and payment plan during the meeting. If you don’t show up and answer their questions to the best extent that you can, your filing may be denied.
Filers are also required to attend a specific court hearing, commonly known as the “confirmation hearing”. Any outstanding objections from creditors or other parties regarding the proposed repayment plan will be resolved during this proceeding. If everything goes as intended (and you attend this hearing), the bankruptcy court will likely approve your repayment plan. Failure to attend may not only affect your current filing but any potential future ones.
You’ll also need to complete a mandatory credit counseling course. Filers who don’t may also see their Chapter 13 filing denied.
There’s a lot to think about when considering Chapter 13 bankruptcy, and it’s a process that shouldn’t be done alone. Call the team at Natural State Law today at (501) 916-2878 to learn more about how we’ve helped clients across Little Rock renovate their financial lives.