A Chapter 13 bankruptcy is a longer and more involved process than a Chapter 7 case but comes with some advantages, such as more flexibility to keep your home and less strict income limits. Here are some frequently asked questions relating to Chapter 13 repayment plans.
How Much Will I Have to Pay in My Repayment Plan?
This answer depends on many factors, but you should know that you will have to pay 100% of your bankruptcy fees, your priority debts, and secured debts for any property you wish to keep. On the other hand, the amount your unsecured creditors will receive varies widely, and they often end up receiving pennies on the dollar.
Exactly how much your unsecured creditors will receive depends on your income, your disposal income after statutorily allowed expenses, and your nonexempt assets. If you have any assets that you would have to surrender in a Chapter 7 case, you must pay at least as much to your creditors in a Chapter 13 plan as they would receive in a Chapter 7 liquidation.
Is a Chapter 13 plan better than a Chapter 7 Liquidation?
Which form of bankruptcy you choose will depend on your income, assets, and other factors. If your income is above your state’s median, and you can’t pass the means test, you may not be eligible to file a Chapter 7 case.
Chapter 13 also gives you a chance to keep your home and catch up on missed mortgage payments over the entire period of your plan. In a Chapter 7 case, you have less flexibility to deal with missed mortgage payments.
There are many more differences between Chapter 7 and Chapter 13 that you should discuss with your bankruptcy attorney. To learn more, read our post contrasting Chapter 7 and Chapter 13.
How Long Will My Repayment Plan Last?
Chapter 13 is a long process, lasting between three and five years depending on your income level. You will need to make your plan payments for the entirety of the plan to receive a discharge. However, there are also benefits to the length plan period. You get more time to catch up on missed payments, and the automatic stay prevents any calls from creditors during the repayment plan. Have more questions about Chapter 13 repayment plans? Contact a Chapter 13 bankruptcy attorney for a free consultation.
Every person’s financial situation is different, and bankruptcy is a complex area of law. Contact the Law Office of Barbara B. Braziel to talk about your unique financial situation and how a bankruptcy could help you.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. Find out more about Bankruptcy in our guide: All About Bankruptcy.