What is a Chapter 13 Repayment Plan?
A San Jose bankruptcy attorney discusses Chapter 13 repayment plan...
Chapter 13 bankruptcy repayment plans reorganize a debtor’s financial life, instead of merely liquidating all the debtor’s non-exempt assets as in a chapter 7 bankruptcy. A chapter 13 repayment plan can be as short as three years, but typically last a total of five years or until a debtor’s entire priority debt is repaid, whichever comes first. A chapter 13 plan must be approved by the court over all, if any, creditor objections. One of the most important things a chapter 13 debtor must remember is to begin making payments to the chapter 13 trustee within the first 30 days following the filing of the petition even if the chapter 13 plan has not been approved. Failing to do so may result in a dismissal of the petition or a conversion to chapter 7 bankruptcy.
A chapter 13 plan is based upon a debtor’s household “disposable income.” Disposable income is monthly income that, after all the necessary bills are paid, is leftover and available to the debtor. Once the chapter 13 plan is submitted to the court, the judge will hold a confirmation hearing where the chapter 13 plan is hopefully confirmed. Once confirmed, the chapter 13 plan is binding on the debtor and all creditors. The debtor must then continue to make timely monthly payments to the chapter 13 trustee who will then disburse the payments to the creditors according to the chapter 13 plan.
Chapter 13 bankruptcy repayment plans reorganize a debtor’s financial life, instead of merely liquidating all the debtor’s non-exempt assets as in a chapter 7 bankruptcy. A chapter 13 repayment plan can be as short as three years, but typically last a total of five years or until a debtor’s entire priority debt is repaid, whichever comes first. A chapter 13 plan must be approved by the court over all, if any, creditor objections. One of the most important things a chapter 13 debtor must remember is to begin making payments to the chapter 13 trustee within the first 30 days following the filing of the petition even if the chapter 13 plan has not been approved. Failing to do so may result in a dismissal of the petition or a conversion to chapter 7 bankruptcy.
A chapter 13 plan is based upon a debtor’s household “disposable income.” Disposable income is monthly income that, after all the necessary bills are paid, is leftover and available to the debtor. Once the chapter 13 plan is submitted to the court, the judge will hold a confirmation hearing where the chapter 13 plan is hopefully confirmed. Once confirmed, the chapter 13 plan is binding on the debtor and all creditors. The debtor must then continue to make timely monthly payments to the chapter 13 trustee who will then disburse the payments to the creditors according to the chapter 13 plan.
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