How A Chapter 13 Bankruptcy Repayment Plan Works
When you start working on filing a Chapter 13 bankruptcy case, your lawyer will create a repayment plan to present to the court. If the court approves it, you must follow this plan to receive the relief you need from bankruptcy. Before you file, you might have some questions about how the plan will work. Here are some details to understand about a Chapter 13 repayment plan if you want to use this branch for debt relief.
It Requires a Payment From You on a Regular Basis
The first thing to understand about repayment plans is that they require you to make regular payments. If you file for Chapter 13, you must agree to make these payments. Your repayment plan will state the frequency of the payments, which might be weekly, bi-weekly, or monthly. When you make the payment, you send it to the trustee assigned to your case. You cannot skip a payment unless you contact your lawyer or the trustee to get this approved.
The Court Pays Your Creditors According to the Plan
When the court receives your payments, they must look closely at your plan to determine what to do with the money. Your plan should outline where they send the money each month. Most likely, they must divide your payments between multiple creditors. The court sends each creditor the correct amount of money based on the plan every time you make a payment. Slowly, you catch up on your payments with your creditors by closely following your repayment plan.
The Plan Lasts for Three to Five Years
You might wonder how long this plan will take, and you can talk to your attorney to learn more. Chapter 13 cases typically require making payments for three to five years, depending on your income.
The Court Reviews Your Debts at the End
When you send your last payment to the court, they will review all the debts you still owe. You might not owe any debts at this time, or you might owe a lot. If you owe money for unsecured, qualifying debts, the courts might forgive these amounts at the end of your plan. Every case is different, though, and your lawyer can help you learn more about how this works.
These are some of the primary things you might wonder about a Chapter 13 repayment plan. If you would like to file for bankruptcy or ask questions about it, you might want to contact a Chapter 13 bankruptcy attorney in your area.