Chapter 13 Bankruptcy Plan

What Is A Bankruptcy Chapter 13 Plan?

There are two main types of consumer bankruptcy and while both will yield results that put you on better financial footing, that is where the similarities between the two types of cases ends. In a Chapter 7 case you are able to wipe out all of your unsecured debt, which for most people consists of credit cards and signature loans. But in a Chapter 13 you are required to pay back at least a small amount of your unsecured debt. A Chapter 7 also lasts a much shorter time than a Chapter 13, between 4 to 6 months versus up to five years, and this difference can be difficult to digest at first. But when you look at what you can accomplish with a Chapter 13, the idea of filing this type of case becomes more palatable.

What To Put In A Chapter 13 Plan

A Chapter 13 starts with filing a plan of debt reorganization. The plan should include the following:complete guild to Chapter 13 Bankruptcy

  • The amount you propose to repay any vehicles you want to keep. This amount can be the value of the car rather than what is actually owed. This feature of Chapter 13 bankruptcy makes it possible to save thousands on your car note, because most car loans are for an amount that is much more than the car’s value. You can also reduce the interest rate you pay for your vehicles, and this coupled with the lower amount really add up to significant savings.
  • The past due amount you owe, if any, on your home and/or auto. You are allowed to pay these amounts out over a course of time rather than all at once and up front. When you are able to spread out the payments for arrears, you can save money by paying only what you can instead of a large lump sum all at once.
  • The percentage of unsecured debt you are able to pay back, which does not have to be a large amount in proportion to what you owe. When you are able to pay back only pennies on the dollar of unsecured debt, a lot of money can be saved and put towards payments for things you need to live every day.


Court Confirmation Of Your Bankruptcy Chapter 13 Plan

Once you have all of the information on your debts gathered, and put it down to a proposed plan, your creditors have the chance to agree to your proposal or ask for a different repayment scheme. If an agreement cannot be made, the Court will make a decision as to the content of your Chapter 13 Plan. When the numbers work and the final decisions are made, the Court will approve the Plan. Thereafter, you are required to make a monthly payment to the Chapter 13 Trustee, and the Chapter 13 Trustee will take that payment and disburse it to your creditors in accordance with the terms of your Plan. When your final Plan payment is made, you will receive a discharge of debts.

For more information about how Chapter 13 bankruptcy works, contact us at We will help by coming up with solutions that work for you.

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