With Chapter 13 bankruptcy, you're required by the court to repay some or all of your debt through a repayment plan.
While this sounds simple enough, there are some things you need to know about the process of setting up a repayment plan.
Unless the court has issued an extension, you're required to file a repayment plan alongside your Chapter 13 bankruptcy petition. If this doesn't work for you, your only other option is to file the plan within 15 days of your filing.
Here are some additional points of emphasis:
- The purpose of the repayment plan is to pay a fixed amount to the trustee for a predetermined period of time, typically three or five years
- The trustee will distribute your payments to creditors, saving you from making direct payments
- It's your job to submit a repayment plan, but it doesn't go into effect until approved by the court
- Creditors' claims are put into one of three categories: unsecured, security or priority
- Creditors have the legal right to file an objection to your proposed repayment plan at the confirmation hearing
- If your plan is not approved, you can modify it or look into converting to a Chapter 7 bankruptcy filing
There is a lot to think about in regards to Chapter 13 bankruptcy, with the repayment plan among the most important details. It's this plan that allows you to repay creditors, all with the idea of eventually clearing your debt and starting fresh.
If you're interested in Chapter 13 bankruptcy, it helps to understand your legal rights and how the repayment plan will impact you in the future.