Repayment Plans For Chapter 13 Bankruptcy
An integral part of a chapter 13 bankruptcy filing is the repayment plan. The repayment plan is designed to repay creditors over a time period of three to five years, depending on your income level. When you file your chapter 13 bankruptcy petition, you must have the desired information for filing a proposal for the repayment plan.
During your hearing, the trustee and court will review the repayment plan, and either approve or reject it. If your repayment plan is rejected, you are allowed to revise and resubmit it for the court’s approval. It is imperative to understand that even if the court has not yet approved your repayment plan, you must make the first payment within 30 days of submitting your petition, and continue to make payments as outlined in your plan on the proposed date each week or month.
Your chapter 13 bankruptcy repayment plan must take all your debts into account in order to protect your creditors’ interests. However, there are different types of debts, and each type is treated differently under chapter 13 bankruptcy law. The first type of debt is priority debt, which may not be eliminated under chapter 13 bankruptcy law and takes priority over other debts. Priority debts are usually debts to the government, such as taxes and fines. The second type of debt as defined by law is secured debt. Secured debts are debts for which the creditor has a collateral that he may seize unless you, at the time of your chapter 13 bankruptcy filing, offer him the repayment of the minimum value of the asset. The third type of debt is unsecured debt. Unsecured debts only have to paid off if the repayment plan allows it, based on your disposable income, and this obligation only lasts as long as the repayment plan – no longer than five years. When you construct your chapter 13 bankruptcy repayment plan, always consult with your attorney to determine which of your debts are priority debts, which are secured debts and which are unsecured. It is often helpful to retain the services of a financial expert to ascertain exactly how much you will be able to pay off per month as well as over the five-year repayment term. Obviously, with careful and considerate planning, you will be able to construct a realistic chapter 13 bankruptcy repayment plan.