Chapter 13 Repayment Plan – Tucson Bankruptcy Attorneys

What is the Chapter 13 repayment plan?  How does the Chapter 13 repayment plan work?  Do I need a Tucson bankruptcy attorney for my Chapter 13 bankruptcy?

Chapter 13 bankruptcy allows you to repay some or all of your unsecured debt over the course of three to five years.  Since Chapter 13 is a reorganization of your debt as opposed to a complete discharge you must have a regular income.  Most individuals file Chapter 13 bankruptcy because their income is too high to qualify for Chapter 7, they are facing foreclosure, they have certain debt that not dischargeable in Chapter 7 bankruptcy, or they have nonexempt assets that would be sold in Chapter 7 bankruptcy.

When you file Chapter 13 bankruptcy you or your attorney will submit a proposed repayment plan to the court.  Upon filing your creditors are given a certain amount of time to file claims and objections to your plan.  The trustee will also issue recommendations as to how to the plan can be changed in order to recommended it for confirmation.

Upon filing Chapter 13 bankruptcy the automatic stay protects you from all creditor collection efforts and remains in effect for the life of the plan.  Your first Chapter 13 plan payment is due no later than 30 days after your case is filed.  The payment is to be mailed to the bankruptcy trustee who upon confirmation pays your creditors according to the plan.

The Chapter 13 duration is three to five years unless you pay all claims in full.  If your income is greater than the median income for your household size, you will be required to participate in a five year repayment plan, unless you repay all claims in full.  Chapter 13 bankruptcy allows you to retain all of your property, including nonexempt assets that would otherwise be sold in Chapter 7 bankruptcy.  In exchange for keeping your property you must pay to your creditors at least the value of your nonexempt property through your Chapter 13 plan.  (liquidation analysis)

Some creditors are entitled to receive 100% of the amount you owe them at the time of filing while others receive a lesser percentage based upon your income and assets.  Debts that must be paid in full through a Chapter 13 repayment plan include back child support or spousal maintenance, most tax debt, mortgage arrears and other secured debt defaults, and more.

In determining how much you must pay through your Chapter 13 plan the bankruptcy trustee will look at your six month disposable income (Form 22C Current Monthly Income/Disposable Income), your current monthly income and expenses (Schedules I & J), and will determine whether you are paying your unsecured creditors at least as much as they would receive if you were to file Chapter 7 bankruptcy.  (liquidation analysis)

Chapter 13 bankruptcy is very complex and is rarely handled by individuals without attorneys.  Our experienced Tucson bankruptcy attorneys have been helping residents of Tucson and Pima county file Chapter 13 bankruptcy since 2009.  Call today to speak directly with an attorney.

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