Section 1301 of the Bankruptcy Code provides that in a bankruptcy for individuals filed under Chapter 13, a creditor may NOT pursue against a co-debtor or a personal guarantor, not in bankruptcy, if the debt is a "consumer debt." Under Section 101 (8), ''consumer debt'' means debt incurred by an individual primarily for personal, family, or household purposes.
Estate of the Debtor
Except as provided in a confirmed plan or order confirming a plan, the debtor shall remain in possession of all property of the estate. Property of the estate includes, in addition to the property specified in Section 541, earnings from services performed by the debtor after the commencement of the case but before the case is closed, dismissed, or converted to a case under Chapter 7, 11, or 12 of this title, whichever occurs first.
Chapter 13 Plan
The debtor must file a Chapter 13 plan with the petition, or within 15 days thereafter. Such time may not be further extended, except by the court for cause. If a debtor first filed a Chapter 7 bankruptcy but later converted to a Chapter 13, a plan must be filed within 15 days from the date of conversion.
At a required confirmation hearing, the Bankruptcy Court may "confirm" the plan if the plan meets statutory requirements, is proposed in good faith, all fees and charges have been paid, and the debtor has a reasonable probability of success in fulfilling the payments under the plan. The value of property, as of the effective date of the plan, to be distributed to each allowed unsecured creditor must not be less than the amount that would have been paid on an unsecured claim under a Chapter 7.
Effect of Confirmation
The confirmation of a Chapter 13 plan generally binds the debtor and all creditors and vests all property in the debtor. Upon completion of the plan, a debtor may be granted a discharge.
For more information from an experienced Chapter 13 bankruptcy lawyer near you, contact us at (732) 402-0088.