Chapter 13 Repayment Plan
The primary difference between Chapter 13 and Chapter 7 bankruptcy is that Chapter 13 includes a repayment plan to deal with debts, while Chapter 7 simply discharges many debts in return for the liquidation of property. In order to complete Chapter 13, a debtor must set up a repayment plan that follows the law and reasonably provides that debtor the chance to pay back what they owe. Thus, a successful Chapter 13 filing is dependent on the debtor having a stable source of income.
For a free consultation and legal advice that could help you determine if Chapter 13 is right for you, contact Birmingham Chapter 13 bankruptcy attorney Paula Greenway today by calling (205) 324-4000.
Chapter 13 Repayment Plan Factors
When setting up a repayment plan, there are several factors that the courts take into consideration before agreeing to permit the bankruptcy to go forward. While Chapter 13 is less punitive in terms of collecting on properties, it also requires additional work to go into the planning and preparation phases, as a single missed payment could jeopardize the entire bankruptcy. The following are some common characteristics of a Chapter 13 repayment plan:
Priority debts must be paid prior to the activation of the repayment plan
Secured debts and late fees must be included
Disposable income may work towards paying unsecured debts
Average length of payment relates to average income
A Chapter 13 repayment plan must be taken very seriously and properly carried out by the bankruptcy filer. A late or missed payment can lead to cancellation of the bankruptcy filing.
If you are considering filing for bankruptcy, contact Birmingham Chapter 13 bankruptcy lawyer Paula Greenway at (205) 324-4000 today to discuss your situation.