If you have filed for or are thinking about filing for Chapter 13 bankruptcy, it’s important to understand how a repayment plan can help you find a clear path to getting out of debt. In today’s blog, Groce & DeArmon, P.C. explain what you need to know about the Chapter 13 bankruptcy repayment plan, and how their team of bankruptcy lawyers can help.
The Chapter 13 Repayment Plan
The Chapter 13 repayment plan is a legal document filed in bankruptcy court that will determine how you will pay back your creditors. It must be filed within 14 days of filing for bankruptcy, and after that, the judge and creditors have the chance to assess or challenge the plan. If the court approves your plan, then you are able to pay back the eligible debts you owe.
When creating a repayment plan, it is possible to do it yourself. However, the process is complicated and very detailed, so it’s best to work with your bankruptcy lawyer who can help hammer out all of the small details.
Categories of Debt
In a Chapter 13 repayment plan, your debts will most often be divided up into three different categories depending on what type of debt is being repaid.
These debts must be paid off during your repayment plan, unless they are given specific exceptions. Priority debts include taxes owed, bankruptcy costs, and child support payments.
These debts include secured loans backed by collateral such as a mortgage or auto loan. You may be required to pay back the collateral or pay the debt in full depending on the details of the loan.
These are debts from credit cards, unsecured personal loans, and medical bills. Since these debts have the last priority in a repayment plan, they may not be completely paid off by the end of the plan. In this case, these debts may be discharged.
The Chapter 13 Means Test
The Chapter 13 means test will ultimately determine the structure of your repayment plan using two forms. Form 122C-1 will determine your monthly income and the length of repayment, and Form 122C-2 will determine how much of your disposable income you can use to pay back creditors. When taking the Chapter 13 means test, it is important to use accurate numbers and consult with your bankruptcy lawyer to avoid problems with the courts.
The Importance of Following the Repayment Plan
After your repayment plan is approved, you will be appointed a bankruptcy trustee who will aid you with payments on the approved schedule. It is important to closely follow the determined payment schedule because missing or stopping payment could result in a dismissed bankruptcy case. A dismissed case will ultimately cancel Chapter 13 bankruptcy, causing you to start over or convert to a Chapter 7 bankruptcy case.
A good way to keep current with your repayment plan is to use autopay or a payroll deduction to ensure they are turned in on time and in the right amount.
Chapter 13 Bankruptcy Help at Groce & DeArmon, P.C.
If you have filed for or are thinking about filing for Chapter 13 bankruptcy, keep in mind the benefits and the process of the Chapter 13 repayment plan. The trusted bankruptcy lawyers at Groce & DeArmon, P.C. can help with bankruptcy resources and repayment plan assistance. Visit us online or call us at (417) 862-3706 today!
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