Chapter 13 Payment Plan.

If you choose to file a Chapter 13 bankruptcy, our office will complete and file a petition with a schedule of your assets and liabilities, a statement of your financial affairs, and your Chapter 13 payment plan. This plan provides for repayment of your debts over a 3 to 5 year period. Repayment is made from your foreseen future earnings over the length of the plan. The bankruptcy trustee appointed to your case will receive monthly payments from you. These payments will be disbursed by the trustee's office to those included in your bankruptcy who you owe. In a Chapter 13 bankruptcy, you will keep all your possessions. At the end of your repayment period you will receive a discharge of your debt. This means that your debts have been completely resolved, even if you have paid less than 100% of the original debt. Most people filing for Chapter 13 pay less than 10% of their unsecured debt over the life of their Chapter 13 plan.

Some Debts Are Handled Differently.

In Chapter 13 you are telling the court that you cannot afford to pay back all the money you owe, but if you were to pay some of your debt, then you would be able to get back on your feet again. So with most of your debt, you will be paying a fraction of what you owe. There are some kinds of debt, however, which in a Chapter 13 bankruptcy will not be forgiven unless you pay them in full through your Bankruptcy plan. If you can't afford it, your Plan may not pay some debts in full. If this is the case, when your bankruptcy is over the remanning unpaid debt will not be forgiven. Typically these types of debt may include, but are not limited to:

Where Your Repayment Will Go.

In a Chapter 13 bankruptcy, the payments you make to the trustee are disbursed by the trustee's office to the people you owe. These people will receive different amounts of repayment, depending on the type of debt.

Priority Debts.

Your Priority Debt typically includes your taxes if they are less than 3 years old, and some kinds of spousal and child support payments you owe.

Secured Debts.

Your Secured Debts could include real estate mortgage loans, car loans, and furniture and jewelry loans. If any of your property is used as collateral for a loan, then the debt is one of your secured debts. If someone you owe has recorded a lien against your property (for example, because they obtained a court judgment against you,) then that debt is also secured. You may be able to wipe out this type of lien in Chapter 13 bankruptcy. You may also be able to eliminate your 2nd or 3rd Mortgage in a Chapter 13 bankruptcy if your home value is less than you owe on your 1st Mortgage.

If you're behind on your Mortgage payments, your Chapter 13 Plan will repay your missed Mortgage payments up to the date you file for Chapter 13. If after you file Chapter 13 you again fall behind on your mortgage payments then a mortgage holder can ask to have your automatic stay lifted in order to repossess or foreclose on your property. However as long as you are current on your payments, you may be able to keep your property if you continue making your payments, and if the trustee determines there is not enough equity in the property to justify its liquidation. If you do not meet these standards, then Chapter 7 may be an alternative for you.

Unsecured Non-Priority Debts.

Your Unsecured Non-Priority Debts might include your taxes from more than 3 years ago, your credit card debt, medical bills, and any personal loans you owe.