If you are considering bankruptcy, you may already have a lot of questions. It is not unusual that most people who file for bankruptcy want to avoid unnecessary stress, and you can do so by consulting a local law firm that specializes in bankruptcy proceedings. This article is intended to give you an overview of what you and your bankruptcy lawyer can talk about and potentially work on. 

Included here are:

  • Knowing the basics of Chapter 13 
  • Relevant types of debt
  • The debt repayment plan

How Chapter 13 bankruptcy works

File Chapter 13 There are several types of bankruptcy, each with its approach to debt settlement and options to get a fresh start in life. The premise behind a Chapter 13 bankruptcy petition is that all of one’s disposable income must go toward the debt repayment plan. After covering permitted expenses, whatever is left must be used to pay back creditors.

If you want to secure your assets while paying the debts you owe, Chapter 13 is the right bankruptcy chapter for you. Before filing for bankruptcy, you must consult with a trusted Monroe bankruptcy attorney. Bankruptcy attorneys will assist you on how to file, understand relevant bankruptcy law, and help you have a successful bankruptcy filing.

If you file for Chapter 13 (reorganization bankruptcy), you must be familiar with debts paid both within and outside of the repayment agreement. Depending on the court’s orders, certain debts are charged directly and others are paid by the payment plan.

What is the debt you must repay in Chapter 13 bankruptcy?

It is stressful to deal with debt and financial problems. Filing bankruptcy helps debtors have a fresh start with their finances. If you require debt relief and intend to file bankruptcy, you will be required to establish a payment plan that the bankruptcy court must approve. This notifies the creditors of your plan to repay your debts, which may involve a trustee in bankruptcy to allocate payments to creditors. In general, the following debts must be settled:

  1. Child support, federal or state back taxes, contributions, or wages owed to employees are all examples of priority debts. These are the loans that must be paid in full.
  2. Secured debts that are due to be paid in full within the duration of the repayment plan must also be paid in full. However, a home or car equity loan, for example, maybe crammed down to minimize the balance.
  3. Secured loans that do not expire during the payment plan’s duration, such as a tax lien, must also be paid in full. 
  4. In general, if the debtor wishes to hold the property and avoid foreclosure, all arrearages on a secured asset, such as the car or home, must be paid off.
  5. The cumulative amount that non-priority unsecured creditors would be receiving if you filed for bankruptcy Chapter 7 instead of Chapter 13 is also included. This is frequently the bare minimum that must be changed into a repayment plan to maximize the disposable income.
  6. All administrative costs associated with filing for bankruptcy such as the filing fee, attorney fee, and trustee’s fee must be noted. 

What is included and how long does the repayment plan last

Under relevant bankruptcy law, regular payments are required to keep your personal property. Some bankruptcy courts will require mortgage payments to be made directly to the lender, while others will require payments to be made through the repayment plan. This could also refer to a car loan or other secured debt, which a competent Monroe bankruptcy attorney can discuss further. Leasing, electricity, phone, tax, and child support payments are often made outside the payment plan.

A Chapter 13 repayment plan lasts for 3 to 5 years, depending on your monthly income and the state median. In general, higher-income filers pay more to creditors. This is frequently calculated using the total gross income for the 6 months before filing a bankruptcy petition.

Consult with a Monroe bankruptcy attorney

If you have any concerns about the above bankruptcy procedure, or if you are still unsure if it is best to file for bankruptcy, hire the best attorneys. You will need an expert to make sure you file for bankruptcy correctly to avoid any issues during the proceeding. Contact our Monroe bankruptcy attorney at E. Orum Young Law for a free consultation. Â