If you are interested in filing for Chapter 13 bankruptcy, you first need to answer a variety of questions.
Most importantly, you need to better understand the repayment plan that will go into effect after your filing is complete.
Here are some of the most important questions to address:
- What types of debt will you repay under your repayment plan? In short, your plan will allow you to pay certain types of debt in full. Known as priority debt, these can include things such as back taxes and child support.
- How long does the repayment plan last? In short, if your average monthly income for the six months leading up to your bankruptcy was more than the median in your state, your repayment plan will last five years. If it was less than the median income in your state, you can use a three year plan.
- What happens if you fail to make a payment? Although you start out with the intention of making every payment in full and on time, something could happen along the way that slows you down. If you face a difficult situation, such as a job loss, that makes it impossible to stay the course, you may need to request a modification.
These are the types of Chapter 13 bankruptcy questions that can help you better understand what you are up against and how to make the right decisions in the future.
There's nothing simple about carrying through with a repayment plan, but once you know what's expected of you it's possible to stay on track.
Source: FindLaw, "Chapter 13 Reorganization Bankruptcy," accessed July 21, 2017