How can I Pay Debt Over Time with a Chapter 13 Bankruptcy?

Chapter 13 debt repayment plans are one of the most helpful tools for the bankruptcy filer. There are numerous reasons why a person can end up with a sizable amount of debt. Those who have tried other methods to repaying this debt, such as debt settlement and credit counseling may feel frustrated. However, with the aid of Chapter 13 bankruptcy, individuals may have a far easier time repaying such debt. Speak with an attorney to learn what the options are in your particular instance.

Paying Debt Over Time

Those who file Chapter 13 bankruptcy will pay debt back over time. In this form of bankruptcy, not all debt is discharged, such as what occurs in Chapter 7 bankruptcy. Rather, most secured loans, such as cars and priority unsecured debt, is repaid throughout the bankruptcy repayment period. This period of time is generally three to five years, though state laws may differ. Throughout that period of time, the following will occur.

• Once an individual files a Chapter 13 repayment plan, and the bankruptcy trustee approves the plan, the individual will then enter the repayment phase of the bankruptcy.
• During this time, he or she will make payments according to the plan approved by the trustee. In general, this plan must afford lenders either full repayment of the debt or it must provide unsecured lenders with at least what the lender would have received through a Chapter 7 discharge.
• Payments continue each month. Rather than paying creditors, though, the filer will pay the bankruptcy trustee. It is critical to maintain these payments.
• Keep in mind that the repayment plan often reduces the total amount the individual needs to pay each month, while working to repay all debt within five years. This amount is based on the ability of the individual to make the payment. Budgets and expenses are often taken into consideration.

Individuals who use Chapter 13 debt repayment are likely to be out of debt faster than continuing to hold on to that debt. There are negative consequences, especially the limited amount of credit available and the black mark on a credit report. However, this plan does allow an individual to repay debt over time.

Hiring an Attorney Matters

Filing Chapter 13 bankruptcy is not an easy process. Numerous documents and procedures must be met. Further, an attorney can help an individual to determine what amount the monthly payment will be and to determine if this payment is possible.