Filing for bankruptcy is a necessity for many individuals, but the processes for Chapter 13 and Chapter 7 bankruptcy are actually entirely different. Unlike under Chapter 7 bankruptcy, which forgives you for your debt, Chapter 13 requires you to create a repayment plan to pay off some of your debts.

But how is the Chapter 13 repayment plan created and what are your obligations?

About the Chapter 13 Bankruptcy Repayment Plan

To begin creating your Chapter 13 bankruptcy repayment plan, you will need to outline your expenses, your income, and your debts. Using the amount of disposable income you have, you must then create a plan that shows the court how you plan to repay your creditors over the next few years.

Before you can officially begin repaying your plan, you will need to receive credit counseling. Through education, you will learn how to better manage your money and boost your credit score.

Finally, you will need to have a bankruptcy trustee. Your bankruptcy will oversee your repayment process, receive your repayment checks each month, and distribute them to your creditors in the order or importance. To successfully complete your repayment plan, you must not miss a payment.

What Does a Chapter 13 Bankruptcy Repayment Plan Include?

Under Chapter 13 bankruptcy, you will be responsible for paying off all priority debts and secured debts. This includes debts that cannot be forgiven, such as alimony, child support, money owed to employees, or tax debts. You must also pay secured debts, including mortgages or car title loans, in full or forfeit the property.

Your Chapter 13 bankruptcy plan will include a plan for unsecured debts, such as credit card debt. However, the amount that you need to pay under your repayment plan will depend on the amount of disposable income you have, the number of years your plan will last, and what property is considered exempt from the plan.

In order to create the best Chapter 13 repayment plan for your situation, you will want to contact a Brooklyn bankruptcy attorney. The experts and Michael F. Kanzer & Associates, P.C. can help you establish a repayment plan that you can afford while also protecting your assets.