Filing Chapter 13 in South Dakota

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In South Dakota, consumers can file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is the most common bankruptcy filed. Chapter 7 is a liquidation bankruptcy that involves the bankruptcy trustee seizing the debtor’s non-exempt assets and selling the assets to repay the debtor’s creditors. The debtor is able to retain possession of the exempt assets including the debtor’s car and assets necessary for the debtor to maintain her livelihood. However, if the debtor would like to keep her assets and the debtor has regular income, the debtor may qualify for Chapter 13 bankruptcy. Unlike Chapter 7, Chapter 13 bankruptcy allows a debtor to pay off debts under an installment plan administered by a bankruptcy trustee.

Chapter 13 Eligibility

To be eligible for filing Chapter 13 bankruptcy, the debtor must have regular income to make the installment payments, and the bankruptcy court must approve the debtor’s repayment plan. The debtor’s income must be regular for at least six months prior to the debtor filing Chapter 13 bankruptcy petition. The bankruptcy court does not require that the debtor’s income be strictly income earned but can include a pension, disability benefits or even a family support obligation, like alimony. The debtor should provide past tax statements or pay stubs to show evidence of the reliability of the debtor’s income. In addition, Chapter 13 has debt limits. As of 2011, the debtor cannot have more than $360,475 in unsecured debt or more than $1,081,400 of secured debt and file for Chapter 13 bankruptcy.

Repayment Plan

The most important part of filing Chapter 13 bankruptcy is the repayment plan. At the time the debtor files for bankruptcy, the debtor must submit a repayment plan for approval by the court. The repayment plan does not discharge the debtor’s unsecured debt immediately, but allows the debtor to develop a plan to repay the debt. The repayment plan may last from three to five years depending on the debtor’s income and debt.

The debtor’s attorney will work with the debtor to create a repayment plan the debtor can afford. The plan will be based on the debtor’s monthly income and how much disposable income the debtor has remaining each month after paying all necessary bills. After the debtor submits the repayment plan, the bankruptcy court confirms the debtor's repayment plan at the confirmation hearing. The debtor’s creditors may also appear at the confirmation hearing and file an objection to the proposed repayment plan.

Chapter 13 Discharge

If the debtor completes the repayment plan, the debtor receives a bankruptcy discharge. The Chapter 13 bankruptcy trustee is in charge of ensuring the debtor completes the plan, including making all monthly installments in full and on time. All debts included in the repayment plan will either be paid or discharged. Debts not included in the bankruptcy do not receive a discharge.

Getting Legal Help

If you have questions about filing Chapter 13 bankruptcy in South Dakota, contact an experienced bankruptcy attorney. An attorney will evaluate your case and help you decide whether filing Chapter 13 is right for you.