Attorney Reveals Chapter 13 Payment Plan Secrets
Unlock the secrets to a successful Chapter 13 payment plan and explore a wealth of options to regain financial stability by browsing options, visiting websites, or following the options that best suit your needs.
Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as a wage earner's plan, allows individuals with regular income to develop a plan to repay all or part of their debts. Unlike Chapter 7 bankruptcy, which involves liquidating assets, Chapter 13 offers a chance to reorganize financial obligations while retaining valuable assets like your home or car. This approach can be particularly beneficial if you're facing foreclosure or repossession, as it provides a structured way to catch up on overdue payments.
The Mechanics of a Chapter 13 Payment Plan
Under Chapter 13, you propose a repayment plan to make installments to creditors over three to five years. The duration depends on your income level relative to the state median; if your income is below the median, the plan lasts three years unless the court approves a longer period1. This plan must be approved by the bankruptcy court and is designed to pay off priority debts such as taxes and child support in full, while unsecured debts like credit card balances may be partially discharged.