We’ve talked about Chapter 13 bankruptcy on this blog numerous times, and when we do we always mention the repayment plan that is involved with the process. This is the signature characteristic of the Chapter 13 filing, allowing the bankrupt individual to reorganize his or her debts and repay his or her creditors in a more nuanced and easier fashion.

But completing and getting that repayment plan approved is also a process. It doesn’t just magically happen. You have to file the repayment plan either with the original bankruptcy filing, or within 15 days of the filing.

The plan should include information that outlines when the payments will be made and how often. Usually these payments are established on a bi-weekly or monthly basis. The plan then has to be approved by a court after your creditors have met and discussed the matter. This confirmation hearing must occur no later than 45 days after the creditors meet. Once approved, you will pay a trustee in accordance with the plan and the trustee will then distribute that payment to your creditors.

Each claim by your creditors will be classified in a certain way, either by being deemed “priority,” “secured” or “unsecured.” Depending on the classification, the debt that is paid by the trustee may be a little different or prioritized differently.

The repayment plan option under Chapter 13 bankruptcy is incredibly important, and knowing how to get through this legal process is critical. Consult with an attorney if you are in need of help.



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