If you are thinking about filing bankruptcy and find out that Chapter 13 would be the best fit for your debt problems, you will be placed on a repayment plan if you file. This repayment plan is standard for all Chapter 13 cases, but the plan itself is unique for each person that files. Here are three important things you should understand about this plan if you plan on filing for Chapter 13.
It will last three to five years
All Chapter 13 cases require repayment plans that last three or five years, and you will know what the length of your plan will be before you file for bankruptcy. To determine if you will have a three-year plan or a five-year plan, your attorney will look at your income amount. For lower-income earners, three-year plans are more common. For higher-income earners, five-year plans are more common. If you can get a three-year plan, you will be able to complete the plan a lot faster, and that is the main reason many people will hope to get a three-year plan.
It is subject to change
If the circumstances in your life change, your repayment plan may also change. The repayment plan your attorney presents to the trustee will be based on your financial situation on the day you file for bankruptcy. Because of this, the plan will be ideal for you right now, but things in life do not always stay the same. After you file, you will be required to report changes to the trustee, and this includes changes to your income or job and changes with your debts. If, for example, your income drastically drops, the trustee might agree to lower the payment amount you are currently paying. If your income increases, on the other hand, the trustee might raise your payment amount.
You might get a discharge when you complete the plan
When you finish making the payments required for your plan, there is a chance that the trustee might offer a discharge for some of the remaining debt. A discharge of debt at this time normally occurs only with unsecured debts, such as credit card bills, and you will not know if this will happen until you complete your entire plan.
Filing for Chapter 13 will require repaying most of your debts, but it is a great option for some people who need debt-relief assistance. If you are interested in using Chapter 13, contact a bankruptcy law firm today, like McElrath Law.
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