Chapter 13 bankruptcy, sometimes referred to as repayment bankruptcy, is a form of debt relief that allows a debtor to restructure their debt and pay back their creditors over the course of three to five years. The Chapter 13 repayment plan is based off of your disposable income and takes into account all your debts, as well as, your ability to pay those debts. In order to confirm your Chapter 13 bankruptcy you must plan a budget and stick to it for the term set forth by the courts. For some people completing a chapter 13 repayment plan isn't always easy.
Completing A Chapter 13 Repayment Plan
Three to Five years is a lengthy period of time during which any number of unforeseen situations can emerge. It is important to stay in touch with your bankruptcy trustee and bankruptcy attorney during this period and respond promptly to correspondence from them. If circumstance do change during the repayment period of your Chapter 13 bankruptcy, both your attorney and trustee may be able to assist you by temporarily pausing your payments or modifying them, giving you an extension, allowing you to take on new debt, and/or allowing you to refinance an existing mortgage or secured loan.
There are also other options available for individuals who can’t fulfill their Chapter 13 payment obligations such as obtaining a hardship discharge, converting to a Chapter 7 bankruptcy, or dismissal of your case in order to refile.
In approving your Chapter 13 repayment plan, the courts generally look for your best effort in paying back your debt. If you can show that you are utilizing all your disposable income to pay nonpriority unsecured creditors back, the bankruptcy trustee may be more inclined to approve deviations in your original plan provided you don’t exceed a period of 60 months. It’s important to keep in mind that if you don’t stay in contact with your Sacramento bankruptcy attorney and trustee, your bankruptcy case could be dismissed leaving you without the debt relief that you sought in the first place.