Debt can be overwhelming. It can begin as a manageable necessity for an Indiana resident to acquire property or credit, and spiral into a burdensome financial obligation that the person cannot get ahead of. When debt becomes something that an individual cannot manage on their own, they may turn to a bankruptcy attorney for advice on how best to address their financial situation.
Chapter 13 bankruptcy is one of the two forms of bankruptcy that individuals may use to alleviate their financial burdens. At the heart of Chapter 13 bankruptcy is the repayment plan, and this post will discuss some of its general elements. It is important that readers remember that no part of this post constitutes legal advice, and all bankruptcy questions should be directed to bankruptcy attorneys who represent individual clients.
Repayment vs. liquidation
When an individual chooses to use Chapter 13 bankruptcy, they agree to create a repayment plan to provide their creditors with payment. This differs from Chapter 7 bankruptcy, which requires debtors to liquidate or sell off property in order to come up with the money to repay their creditors. Chapter 13 bankruptcy requires a debtor to have sufficient disposable income to satisfy many classifications of debt.
The repayment plan must be created at the beginning of a Chapter 13 proceeding. It must be approved by the individual’s bankruptcy court, and there must be a trustee who can distribute the payments to the creditors on the approved schedule. Creditors may have an opportunity to weigh in on the repayment plan and voice their concerns about how much they will receive under it.
Meeting the repayment plan requirements
It is important that debtors take their repayment plans seriously. The failure of a debtor to comply with the terms of their repayment plan may result in the loss of bankruptcy protections and the dismissal of their bankruptcy suit. In order to ensure that a debtor is fully compliant with their Chapter 13 proceedings and their repayment plan, they can solicit the help of a bankruptcy attorney in their community.