Chapter 13 Repayment Plans
Once you file a Chapter 13 bankruptcy petition, you will have 15 days to file a repayment plan that will be acceptable to the court. At the Bradford Law Offices, PLLC, our Fayetteville Chapter 13 bankruptcy lawyers understand just how overwhelming this task can seem, and our firm has the experience and resources that you will need to develop a realistic plan that will work for both you and the court.
The repayment plan will be used to repay any debts that are owed to your creditors according to the specific terms of your plan. Keeping that in mind, these debts can be generally broken down into three categories: priority claims, secured claims, and unsecured claims. The terms of your repayment plan will need to be carefully structured with the help of an attorney around these categories.
Claims that are provided with priority by bankruptcy law must be paid in full by the proposed repayment plan. Priority claims will include debts associated with taxes, back child support and alimony, unpaid wages or salaries for employees, and contributions that should have been made in an employee benefit fund. On top of that, the administrative fees of the bankruptcy process—including the filing fee, attorneys’ fees, and trustee’s commission—are all considered as priority claims.
When it comes to your claim, we will need to develop a plan to pay these claims in full within the span of the repayment plan. That being said, there are two exceptions to this general rule:
- Those in which priority creditors agree to another treatment of the debt, and
- Domestic support debts that cannot be paid in full because all of the debtors “disposable income” has been dedicated to his or her repayment plan
These are finer points of the Chapter 13 bankruptcy process, and it is for that reason that we will need to speak with you about the particulars of your finances to determine exactly how either of these narrowly-defined exceptions may apply to you.
Claims that are considered to be secured are those in which the creditor holds the right to reclaim specific property—or what is called collateral—if the debtor does not pay his or her debt against that collateral. In order to retain the collateral that was used to secure a particular claim—for instance, a home mortgage—the plan must be designed to pay back the value of the collateral, at the very least. If a loan was used to recently purchase the collateral—like a new vehicle—then the plan must pay back the full amount of the loan, rather than the value of the collateral.
If you are unable to create a plan that will repay these secured claims within the period of time that is specified in your repayment plan, the collateral that was used to secure the claim can be repossessed by the creditor. However, it should be noted that some secured loans can still be repaid over the original schedule so long as any missed payments will be repaid within the framework of the repayment plan.
Unlike priority and secured claims, your repayment plan does not necessarily need to pay all of your unsecured claims. That being said, if both of the following conditions are met, it is possible that you will not need to fully repay the unsecured debts you owe:
- That all of the “disposable income” that you are projected to possess will be used to pay your debts over the duration of your repayment plan, and
- That your unsecured creditors will be recovering at least as much repayment under your plan as they could under Chapter 7
Once you reach out to one of our attorneys, we can help you understand exactly what amount of “disposable income” you will have to pay, according to the way it is defined in Chapter 13. Just as importantly, we can help you determine whether you will be able to meet these conditions and, thereby, determine exactly how much of your unsecured debts may be forgiven.
Consult with a Chapter 13 Bankruptcy Attorney in Fayetteville
If you plan on filing for Chapter 13 bankruptcy relief, you should reach out to one of our lawyers in Fayetteville to talk about your Chapter 13 repayment plan. With more than 20 years of experience serving the Raleigh community, our legal team has all of the understanding and resources you will need to develop a plan that works for you and that is acceptable to the court. To speak with an attorney at the Bradford Law Offices, PLLC, about the particulars of your situation, please call our offices at (910) 668-0006 today.