Individuals struggling financially may require help to regain control over their finances. Bankruptcy is a form of emergency relief for those overwhelmed by their debt and worried about a potential inability to catch up on payments and avoid aggressive collection activity.
Some people will file for Chapter 13 bankruptcy because their income is too high to qualify for Chapter 7 proceedings or because they have valuable property that they don’t want to risk losing in the bankruptcy process. Chapter 13 Bankruptcy does not require the liquidation of your personal property but will instead necessitate a repayment plan.
What should someone contemplating bankruptcy know about the repayment plan required in Chapter 13 proceedings?
1. How long the plan will last
Typically, the person filing for bankruptcy will need to make at least three years of payments as arranged by the trustee overseeing your case. Sometimes, the courts will require five years of payments instead. Only those who make all of the required payments and fulfill all other requirements set by the courts will potentially qualify for a discharge after their bankruptcy.
2. How much the payments will cost
There is no set formula to help you calculate what the courts will require from you each month. Instead, what you pay will be a reflection of your nonexempt equity and your income. Your creditors and the trustee overseeing your case will review financial statements and negotiate a repayment plan that is as fair as possible. Typically, those filing for chapter 13 bankruptcy can expect their disposable income to go toward repaying their unsecured creditors until they complete the plan.
3. How you make the payments
Anyone who has tried to negotiate a new payment arrangement with a creditor before understands how easy it is for a settlement arrangement or adjusted payment agreement to not show up in a company’s internal records.
You might naturally worry that you will soon face collection calls or complaints from creditors after you send them partial payments in accordance with the plan you negotiate in the meeting. Thankfully, that won’t be an issue. You only have to send one payment directly to the trustee, and they will handle making the disbursement to the individual creditors.
Educating yourself more about what to expect during a Chapter 13 bankruptcy can help you feel confident as you move forward with your filing. https://www.bravermanlaw.com/bankruptcy-law/chapter-13-bankruptcy/