If you are considering bankruptcy, you probably have a lot of questions in mind. It is not surprising that most bankrupt people opt to save themselves from the hassle by contacting a local law firm specializing in bankruptcy cases. File bankruptcy the right way in order to have your debts discharged. 

This article will focus on the repayment plan in a bankruptcy chapter 13. This aims to brief you on what you and your bankruptcy lawyer will discuss and eventually work on.

If you require debt relief and you decide to file for bankruptcy, you are expected to come up with a repayment plan that must be approved by the court. This informs your creditors on how you plan to pay your debts, which may be through a bankruptcy trustee tasked to distribute payments to your lenders.

Generally, the following debts must be wiped out through the plan:

1. Priority debts, which may include back child support, federal or state back taxes, contributions owed to an employee fund, or salaries and wages owed to employees. Child support owed to government agencies is often excluded. These priority debts are to be paid in full.

2. Secured debts contractually ending within the period of the repayment plan are also to be paid in full. Examples are car or home equity loan, the balance of which may be reduced through a cram-down.

3. Secured debts not ending within the period of the plan, such as a tax lien, are likewise to be paid in full.

4. Any arrearages on secured property, such as your car or home, must be paid off if the debtor intends to keep the said property and avoid foreclosure.

5. The total amount that nonpriority, unsecured creditors would be receiving had you filed for Chapter 7 bankruptcy instead are also included. This is often the minimum amount that must be paid through the repayment plan, which would increase vis-à-vis your disposable income.

6. Any administrative expenses relevant to declaring bankruptcy, including the bankruptcy filing fees, attorney’s fees, and trustee’s fees must also be noted.

 Filing BankruptcyThere are several types of bankruptcy with several approaches in debt-settlement and different means of getting a fresh start at life. In a Chapter 13 bankruptcy petition, the idea is that one’s disposable income must be fully devoted to the repayment plan. Whatever is left after covering allowed expenses must be used to pay creditors. 

If you declare bankruptcy under Chapter 13, you must be familiar with debts paid either inside or outside the repayment plan. Some debts are paid directly while some are paid through the plan, depending on what the bankruptcy court specifies.

According to bankruptcy laws, regular payments must be made to keep your property. Some courts would require mortgage payments to be made to the lender while some would have it paid through the plan. Such monthly payments may also apply to a car loan or other secured debts, that can further be explained to you by your bankruptcy attorney. Current payments for rent, utilities, telephone, taxes, and child support are made outside of the repayment plan.

Depending on your income and the median for each state, the plan is for three or five years. Higher-income filers generally pay more to creditors. The average gross income covering six months before filing for bankruptcy is often used to compute this.

Do you want more information on bankruptcy filings? Talk to a bankruptcy attorney now!

If you have questions on the above bankruptcy process or if you intend to file for bankruptcy, make sure to get one of the best bankruptcy law firms in Arizona. Bankruptcy forms that need to be filled out in bankruptcy filings can be confusing and tedious especially if you are a new filer.  At EZ Legal Fees by WantAFreshStart, not only will we help you with more information on bankruptcy, but our team of experienced bankruptcy lawyers will also make sure you file for bankruptcy correctly. Otherwise, if there any oversight in the bankruptcy petition rules, you risk getting your bankruptcy petition dismissed. Contact us now for a free consultation.