Chapter 13 bankruptcy law in the U.S. is designed to provide relief to debtors. The goal is to give a person a restructured payment plan that will allow them to get their finances on track enough to keep up with existing debts. This is notably different from the Chapter 7 system, where most of a debtor's obligations are canceled in return for liquidating most of their assets to pay creditors. Consequently, there are some serious questions you will be asked if you're planning to go this route.

Are Your Finances Stable Enough?

By far the biggest fear the court and creditors have in accepting a Chapter 13 bankruptcy is that the debtor will eventually go broke. This is literally the opposite outcome the court is seeking.

To that end, you will have to present evidence of what your current and near-term finances are. You will have to produce documentation regarding your income, assets, outstanding debts and earning potential. This means showing what your bills look like, how you've trimmed down to save money and how you plan to repay your creditors. A plan will then be composed based on what a trustee takes away from speaking with your creditors and you.

All this happens because liquidation remains an option if a Chapter 13 bankruptcy fails. If the evidence indicates a person is going to end up needing to file for liquidation, the court would prefer to not spend years fiddling with a repayment plan.

Have All Debts Been Accounted For?

This is the biggest fear every petitioner should have. You want to assemble a full accounting of all the debts you owe, even if those creditors haven't pursued collection against you. If you don't have current bills from all creditors available, call them and simply inform them you need to get an exact number. Don't discuss your bankruptcy plans, and do not enter into a payment agreement. Just get the number and move on.

Have All Assets Been Disclosed?

Misrepresenting your current assets runs the risk of being charged with fraud. Make sure all assets you own have been fully documented and disclosed to the court. Creditors can and do investigate petitioners' assets, and they will have the right to bring this up during a meeting with the trustee assigned to your case. More concerning, you might be ordered to attend this meeting and may be asked to testify under oath.