How to Create a Chapter 13 Repayment Plan

One of the most common types of bankruptcy filed in the United States is Chapter 13. Unlike Chapter 7, borrowers do not have to pass the means test when filing Chapter 13. On the other hand, borrowers must also repay most of their debt according to the terms of the payment plan created during this type of bankruptcy. It is essential to understand the Chapter 13 repayment plan and how it is created. Below, our Tampa Chapter 13 bankruptcy lawyer explains more.

File Chapter 13 Bankruptcy 

Anything that happens during Chapter 13 bankruptcy, including the creation of the payment plan, starts with filing the petition with the court. You will need to show that you are eligible to file, which means providing that you have a regular source of income, and that your debt does not exceed a certain amount. You must also complete a credit counseling course.

Calculate Disposable Income 

Repayment plans in Chapter 13 bankruptcy are created according to the disposable income a person has available to repay their debt. Disposable income referee to the income you earn after deducting reasonable expenses, such as food, utilities, and rent. Your disposable income will determine how much you will have to pay towards the plan every month.

Create a Repayment Plan 

Many people create a repayment plan during the credit counseling course they attend. If you have done this, you can submit the plan along with your petition for court approval. If you have not yet created a repayment plan, the bankruptcy trustee will create one for you based on your disposable income and your debt obligations. The repayment plan will extend between three and five years. The bankruptcy trustee will ensure the plan is fair and feasible for both you and your creditors.

Attend the Confirmation Hearing 

After the bankruptcy trustee has created or approved the payment plan, you will need to attend the confirmation hearing. The court will review your plan during this hearing to confirm that it meets the requirements under the Bankruptcy Code. At the hearing, creditors may also be given the opportunity to object to the repayment plan.

Distribution of Payments 

Once the court has approved your repayment plan, you will make payments to the bankruptcy trustee. They will then distribute the payments to your creditors according to the terms of the plan. You must make all payments in full and on time. If you do not, the court may dismiss your bankruptcy case, which means that you automatically owe your debts in full. Penalties and interests may also be applied to late payments, which will mean you may end up paying more than you owed.

Complete the Plan 

If you have made all payments in full and on time in accordance with the plan, it is considered to be complete. Any debt you have remaining may be discharged, although some debts are not able to be discharged.

Our Chapter 13 Bankruptcy Lawyer in Tampa Can Help with Your Plan 

If you are thinking about filing Chapter 13, you need legal help. At Florida Law Advisers, P.A., our Tampa Chapter 13 bankruptcy lawyer can help you create your plan and guide you through the process so it is as easy as possible for you. Call us today at 1 (800) 990-7763 or contact us online to schedule a consultation and to learn more about how we can help.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics