What You Must Know About The Chapter 13 Repayment Plan
Posted on: 3 November 2020
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When you seek advice from a bankruptcy lawyer, they will tell you which branches of bankruptcy you qualify for and which to use. If your lawyer recommends Chapter 13 bankruptcy, it is likely because you do not qualify for Chapter 7. If you must use Chapter 13, you will have a repayment plan. Here are several essential things to know about this repayment plan.
The Length of the Plan
The first thing to know about the repayment plan is the length of the plan. You will have to make payments to the bankruptcy trustee for three to five years. Your plan length depends on your income. If you have a higher income than average people in your state, your plan will last five years. If you make less than this, you will have a three-year plan. Your lawyer will perform a means test with your income to determine this answer.
The Amount You Must Pay
The amount of money you must pay depends on many factors. The primary factors that affect your payment amount are your income, fixed debts, and living expenses. Your lawyer will closely examine your total income. Next, your lawyer will add up your fixed expenses, such as your mortgage and car payments. After that, the lawyer adds up the money you need each month for other expenses. From there, your attorney can determine a fair amount for you to pay for your repayment plan.
How Often You Must Make Payments
The other thing you must find out is how often you must make the payments. Some people make Chapter 13 repayment plan payments weekly. Others make them biweekly or monthly. You will know the frequency when you begin the plan, and you will know how to make the payments when you begin.
The End Result of a Repayment Plan
A Chapter 13 repayment plan has two main purposes. The first purpose is to help you catch up on your secured debts and priority debts. Next, the purpose is to help you eliminate other debts. When you pay the final payment, the court might release some remaining debts, leaving you in excellent financial shape.
If you use Chapter 13 bankruptcy and make every scheduled payment, you will conclude the plan in three to five years. At that time, you will have a much better financial position. If you would like more information about how this branch works, talk to a bankruptcy attorney today.