What Is Chapter 13 Debt Repayment?
- When you file a petition for Chapter 13 bankruptcy, you are assigned a trustee. You make a lump sum payment to the trustee and the trustee sends payments to your creditors. You do not need an attorney to file a petition, but it would be advisable to have an attorney file for you. The entire procedure can be complex and technical. Your petition is filed in the bankruptcy court in the district where you reside.
- A repayment plan is set up through Chapter 13 bankruptcy. This plan is usually 36 to 60 months. After making all of the payments, your debts should be paid off.
- A Chapter 13 bankruptcy can remain on your credit file for 10 years. After 10 years it should drop off your file. Your credit score can decline substantially as a result of a bankruptcy.
- With a Chapter 13 bankruptcy, your unsecured debt must be less than $336,900 in the repayment plan. You secured debt must be less than $1,010,650. The amount repaid could be anywhere from 10 to 100 percent; it's determined by your income and the amount and type of debt you have. Unsecured debt does not have anything pledged as collateral for the loan, like credit cards. Secured debt has something pledged as collateral, like a home mortgage loan or an automobile loan.
- A Chapter 13 bankruptcy repayment plan gives a debtor the opportunity to keep all of his property if he continues to make the payments.
- An individual files for Chapter 13 bankruptcy when the fair market value of his assets exceeds the amount of exemptions allowed. Exemptions are not included in the bankruptcy filing. Each state has different exemptions. Exemptions are basic assets such as clothing, furniture, tools of the trade or computer equipment. The court allows an individual to keep these exempt items so that he can get a new beginning after bankruptcy.
