What Elements Make Up a Chapter 13 Repayment Plan?

  • By:David Bate

Medical Malpractice Lawyer

Filing for Chapter 13 can begin to alleviate some of the stress debtors may be experiencing for a number of reasons. For one, you can finally begin to experience some relief from the constant calls being received from your creditors. Additionally, you will begin to develop a repayment plan that outlines how the debtor will pay back their debts. Chapter 13 bankruptcy can be an attractive option for someone who may not be eligible for Chapter 7. An attorney can play a vital role in assisting their clients in developing a repayment plan that leaves nothing out.

Chapter 13 Bankruptcy

An attorney can help you to decide whether Chapter 13 bankruptcy is the most viable bankruptcy option for you. Chapter 13, also known as the wage earner’s plan, is an alternative to Chapter 7 bankruptcy. Often, it is a better option for someone who draws enough income to pay off some of their debts. This is commonly conducted through a reorganization of a debtor’s unsecured debts, which are usually paid back at a lower interest rate. There can be a variety of advantages to pursuing Chapter 13 bankruptcy. One in particular, is the ability to stop the bank’s efforts to foreclose on your home. Perhaps one of the most key elements to this is that a debtor will pay back their debts through a repayment plan. Once developed, this plan is then submitted to the courts for approval. Over the course of your bankruptcy, you will be required to make timely payments to a bankruptcy trustee appointed to oversee your case. The trustee will disburse your payments to creditors.

Key Elements to a Repayment Plan

In most cases your repayment plan will last anywhere from 3-5 years. The debtor’s responsibility will be to submit a repayment plan to the courts within 14 days of filing the petition for bankruptcy. With so much to consider, the process can be overwhelming as you will be required to carefully assess your finances to come up with a plan. Here are key components to the process:

  • Calculate your debts. This should include all priority debts, mortgage payments, car loans, and any unsecured debts such as medical bills and credit card balances.
  • Include your administrative costs such as trustee fees, filing fees, and attorneys fees
  • Determine you average income over the course of a six month period.
  • Determine how much extra or disposable income you have each month. This extra will be applied to your repayment plan.

Your attorney may play a key role in ensuring that the plan you come up with incorporates key information in order to obtain the court’s approval. Without an attorney by your side, you risk making a complicated process more challenging and the risk that your plan will not be approved.

Help Developing a Repayment Plan

A bankruptcy attorney can take the lead on drafting your repayment plan and submit it to the courts. Utilizing a bankruptcy in a Chapter 13 may be a wise option. Not only does their service give you peace of mind, they can help you to make the most informed decisions regarding your case.

Are you currently in the process of making decisions over how you will manage your debts? Perhaps bankruptcy had crossed your mind but you are too fearful of the repercussions? If you are unsure of whether Chapter 13 is the right course of action for you, contact a bankruptcy lawyer Memphis, TN trusts so they may review your financial situation.

 


 

Thank you to our friends and contributors at Darrell Castle & Associates, PLLC for their insight into bankruptcy and the elements for chapter 13 repayment plans.

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