Chapter 13 Bankruptcy: Repayment Plan
How Does Chapter 13 Bankruptcy Work?
If you're considering Chapter 13 bankruptcy, you’ll need to know that it involves creating a repayment plan for your debts. This can often last between three to five years. The goal is to help you reorganize your finances, catch up on missed payments, and hold onto important assets like your home or car. You’ll make monthly payments to a bankruptcy trustee who distributes the funds to your creditors.
What Debts Do You Pay in Chapter 13?
In this chapter of bankruptcy, you’re required to pay certain debts through your repayment plan. These typically include:
Priority debts like taxes and child support.
Secured debts such as a mortgage or car loan if you want to keep the property.
Unsecured debts like credit cards and medical bills, using whatever disposable income remains after paying the priority and secured debts.
The court will review your income and living expenses to decide how much income should go toward paying creditors.
How Long Does the Chapter 13 Plan Last?
The length of your repayment plan depends on your income. If your income is above the median, it typically stretches to five years. Either way, the plan helps to catch up on your debts while keeping your essential property.
What Happens at a Chapter 13 Confirmation Hearing?
After you file for Chapter 13 bankruptcy, you’ll attend a confirmation hearing where the court will decide whether to approve your plan. During this hearing, the judge will review any objections from your creditors or the bankruptcy trustee. If all goes smoothly, your plan will be approved, and you can proceed with your payments.
Tips for Succeeding with Chapter 13 Bankruptcy
Chapter 13 can be challenging, but it offers a chance to regain control over your finances. Here are some tips to stay on track:
Stick to Your Plan: Make your monthly payments on time to avoid complications.
Keep Communication Open: Stay in touch with your bankruptcy attorney and trustee to address any issues.
Budget Wisely: Keep your spending in check so you can meet the plan’s requirements.
Is Chapter 13 Right for You?
Chapter 13 bankruptcy gives you the chance to restructure your debt while keeping important assets. It requires commitment, but with the right plan in place, you can regain financial stability. Make sure to work with a bankruptcy attorney like Cindee Dale Holnes to ensure the best outcome for your case.
