An important part of Chapter 13 bankruptcy is creating a repayment plan that works with your financial situation and ability to repay your debts. When creating this plan, there are a number of important factors to consider. If you are considering filing for Chapter 13 bankruptcy and need assistance creating a repayment plan, contact a Chapter 13 bankruptcy lawyer today.
What Is A Chapter 13 Repayment Plan?
A Chapter 13 repayment plan is a court-approved strategy for paying off your debts over a period of three to five years. This type of bankruptcy allows you to reorganize your financial obligations and make manageable payments based on your income and expenses. A repayment plan allows you to pay your debts on more favorable terms while still allowing the creditors to collect.
How Is A Repayment Plan Created?
Creating a Chapter 13 repayment plan involves several steps. First, you must calculate your disposable income, which is the amount left after deducting necessary living expenses from your total income. Then, you’ll outline how you intend to pay back your debts, prioritizing secured debts like mortgages and car loans. The plan must also allocate funds to unsecured debts, such as credit card balances and medical bills. Attorneys like those at Resolve Law Group can attest to the importance of accurately detailing your financial situation to ensure your plan is feasible and approved by the court.
What Types Of Debts Are Included In A Repayment Plan?
In a Chapter 13 repayment plan, all types of debts can be included, but they are treated differently. Secured debts, such as mortgages and car loans, must be paid in full if you want to keep the asset. Priority debts, including taxes and child support, must also be paid in full. Unsecured debts, like credit card bills and medical expenses, are paid based on your disposable income. In some cases, you may not have to pay the full amount of unsecured debts, but they must be included in the plan. An experienced lawyer can help you assess your financial situation and determine how to categorize your debt in your repayment plan.
What Happens If Your Income Changes?
Life is unpredictable, and your income may change during the repayment period. If you experience a significant increase or decrease in income, it’s essential to inform the bankruptcy court and your trustee immediately. You may need to modify your repayment plan to reflect your new financial situation. Adjustments can include increasing or decreasing your monthly payments. Your lawyer will help you navigate any changes to your financial situation.
How Can A Lawyer Help?
An experienced lawyer can be instrumental in guiding you through the Chapter 13 process. These professionals can help you understand your rights and responsibilities under bankruptcy law, negotiate with creditors, and ensure that your repayment plan is fair and manageable. With a process as complex and consequential as filing for bankruptcy, having experienced legal representation is crucial.
Discuss Your Case With A Lawyer Today
Creating a Chapter 13 repayment plan can be a complex process, but it offers a valuable opportunity to regain control of your finances and work toward a debt-free future. By understanding the requirements and working closely with an attorney, you can develop a plan that meets your needs and satisfies your creditors. For more information on how to create a repayment plan, contact an experienced lawyer today.