Chapter 13 bankruptcy is one of the common forms of bankruptcy proceedings that individuals use to get out from under their insurmountable debts. The hallmark of Chapter 13 bankruptcy is the repayment plan. This plan is crafted by the debtor with approval from the bankruptcy court and is used to help the debtor satisfy their outstanding obligations over time.
This post will investigate repayment plans under Chapter 13 bankruptcy. The contents of this post are not offered as legal or financial advice. Any individual with questions about how to begin a bankruptcy proceeding can contact their trusted Texas-based bankruptcy attorneys.
What is a Chapter 13 repayment plan?
Individuals who use Chapter 13 bankruptcy are required to have disposable income at the time of their filings. If a person does not have money to use to pay down their debts over time, they may have to convert their bankruptcy filing into a Chapter 7 claim to pursue debt relief through asset liquidation. Chapter 13 bankruptcy is for individuals with some income to dedicate to their debts.
When creating a repayment plan, an individual must look at what debts they must repay and what money they have to accomplish it. They can take anywhere from 36 to 60 months to complete their repayment plan, and their plan must cover all debts to prioritized creditors. Not all repayment plans are initially approved by bankruptcy courts and some need to be modified before they are accepted.
What happens when a repayment plan is completed?
The goal of any bankruptcy proceeding is the discharge of the debtor’s debts. If an individual successfully fulfills the terms of their repayment plan, their bankruptcy court may grant them discharge and release them from the financial obligations that were covered in their plan. Not all debts are dischargeable in bankruptcy and individuals should be aware of what they are still liable for even after getting their discharge.
Bankruptcy is a complex process. It involves financial and legal decisions that not all debtors are prepared to make on their own. Legal advice from bankruptcy attorneys can provide support and confidence to those who are unsure of how best to meet their debt challenges.