Residents of Tennessee and Arkansas considering Chapter 13 bankruptcy should take a few moments to examine how the repayment plan works. Chapter 13 is a debt restructuring plan that allows people to repay their current debts at a fixed monthly price without fear of collection activity.
Understanding Chapter 13 repayment plans
The Bankruptcy Court will appoint a trustee to your case when you file for Chapter 13 bankruptcy. This trustee will be responsible for setting a repayment plan for your case and for dispursing your payments after your case has been approved.
If your income is below the median level of your state, your repayment plan will be a 3-year plan. If your income is above this level, you may be able to stretch the repayments out to five years.
The items that will be included in your repayment plan are:
- Mortgage Payments
- Vehicle Payments
- Secured Payments
- Trustee Fees
- Administrative Costs
- Attorney Fees
- Disposable Income
Why does the Court count my disposable income?
The court will look at your disposable income after expenses to see if there is money to apply to your unsecured debts. In most cases, Chapter 13 bankruptcy will not pay unsecured debts unless all other debts and expenses are covered. When the bankruptcy is finalized, unsecured debts are absolved. Unsecured debts include most credit cards, personal loans without collateral, and medical bills.
The benefits of Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy protection can help you recover from financial problems. This type of bankruptcy can stop evictions and foreclosures, allow you to keep your vehicle so you can go to work, reestablish your utilities, and stop wage garnishments.
If you have been struggling with debt because of financial problems, you may benefit from bankruptcy protection. If your income is high enough to file for Chapter 13 bankruptcy, review the repayment plans available to see how they can help you regain control of your finances.