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Helping People Get A Fresh Financial Start to Regain Financial Independence

What should I know about the repayment plan?

On Behalf of | Sep 10, 2019 | Bankruptcy, Chapter 13 Bankruptcy

When you file Chapter 13 bankruptcy in Indiana, it is important that you understand this type of bankruptcy requires a repayment plan. Unlike Chapter 7, which erases your debts, Chapter 13 allows you to restructure your debt so you can afford to pay it off or at least pay a large portion of it. Before you file, you need to understand the basics of the repayment plan.

Forbes explains that to finalize a Chapter 13 bankruptcy, you have to complete the plan to repay your debts. If you do not, the court could dismiss your case, and you would be left owing all your debts.

When it comes to the repayment plan, the court will look over your debts and your finances. One goal in the process is to help you keep assets, such as your vehicle and your home. So, some of the debts you will repay will have to be paid in full to keep those assets. Unsecured debts are often placed at the bottom and you only pay what you can on them.

You and the court work together to create the plan as it works with your finances. The court will send you to credit counseling where you will work with a professional to develop a solid plan. The court then must approve this plan. You may have to modify it if the court finds issue with any detail.

Your debts that are not dischargeable through bankruptcy are also included in the plan. This includes child support, student loans and taxes. You will have to stay current on those payments as part of your bankruptcy plan.

Chapter 13 takes a while to resolve due to the repayment aspect. You can expect to be finished with the process in three to five years. This information is for education and is not legal advice.

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