In the lingo of the U.S. court system, filing a do-it-yourself case is known as filing pro se. While you have the right to file a pro se Chapter 13 case, the complexities make it challenging. Chapter 13 bankruptcy can get complicated because while it doesn't require the forfeiture of any property, it does involve a payment plan which can last as long as five years. If you don't create a workable repayment plan that meets all of the court's requirements, your bankruptcy case may fail.
Qualifying for Chapter 13
As a pro se filer, the first thing you must determine is whether or not you even qualify to file Chapter 13, something an attorney could calculate rapidly. To qualify, you have to earn a sufficient income to fund a repayment plan for your creditors. The courts also impose a debt limit. You can't file Chapter 13 if your unsecured debt, such as credit card debt, exceeds $383,175, an amount that is subject to regular revision. Your secured debts, such as car loans or home mortgages, can't total more than $1,149,525. Something that a pro se debtor might overlook but that a good Chapter 13 attorney would know is that your case could be dismissed if you aren't current on your past four years of taxes.
Developing a Repayment Plan
The repayment plan is the heart and soul of a Chapter 13 bankruptcy. To successfully complete a Chapter 13 case, you'll have to create a repayment plan that fulfills all bankruptcy code requirements and passes muster with a judge. Drafting a repayment plan consists of two main steps: calculating your disposable income and computing how much debt you must pay back.
Your disposable income is critical in a Chapter 13 case because you must essentially hand over all of it to your creditors in your repayment plan. Disposable income is the amount you have to spend after you pay for all of your basic necessities. You'll calculate your disposable income using Forms 22C-1 and 22C-2 of the bankruptcy petition. On these forms, you're required to list income from all sources, such as wages, alimony, business or rental income, interest and dividend income, pension income and unemployment compensation. From this figure you'll deduct your allowable expenses, which is an extensive list including education, transportation, housing, utilities, life insurance, food, clothing and healthcare costs. When you subtract your allowable expenses from your income, you'll have your disposable income for bankruptcy purposes. As a pro se filer, you'll have to pay particular attention to what information the forms request because you won't be as familiar with what is allowed as an attorney might be.
If your income falls below the median income in your state, that's good news: It means your payment plan will last only three years and you can use your actual expenses in determining your disposable income. If your income is above the state median, your payment plan will last five years and you'll have to take the additional step of completing Form 22C-2. On Form 22C-2, you must use national and local standard expenses for certain items, such as food, clothing, housing and vehicle expenses, when computing your disposable income. This restriction helps limit lavish spending in those categories. For example, the national standard for monthly food expenses for a single person is $315 as of 2015. If you're a single, above-median bankruptcy filer, the courts will not allow you to claim food expenses above $315 on Form 22C-2.
When you file Chapter 13, you must pay administrative claims and priority debts in full. Administrative claims include your filing fees and the trustee commission, which is between 3 and 10 percent of your monthly payment. Priority debts include back alimony and child support, wages or commissions you owe any employees, tax debts and contributions you owe to an employee benefit fund. If you want to keep any secured property, such as your home or car, you must make those payments as well. Unsecured debts, such as credit card debts, will be paid back between 0 and 100 percent, depending primarily on the amount of your disposable income as calculated in Form 22C-2.
As a pro se filer, successfully drafting a Chapter 13 repayment plan is likely to prove a daunting task. According to the U.S. Courts, in pro se Chapter 13 cases filed in the Central District of California in 2011, approximately 0.4 percent of cases managed to get confirmation of their repayment plans, equating to only 1 in every 250 plans.
While the repayment plan is a critical component of a Chapter 13 case, you'll have to complete the entire bankruptcy petition to successfully file a case. A bankruptcy petition is a lengthy document that requires you to list all of your creditors, all of your debt and all of your income and business dealings. Justin Harelik, an attorney based in Los Angeles, notes that bankruptcy has many requirements that often get overlooked by pro se filers, such as the need to submit your tax return and pay stubs along with proof that you have taken an approved credit counseling course. Harelik suggests checking your local bankruptcy court website to help prevent overlooking items that could get your case dismissed.
After you file your case, you'll have further obligations before you can get your discharge, such as attending a meeting of creditors, getting your repayment plan approved at a confirmation hearing and ultimately taking a financial management course.