A debtor seeking relief under Chapter 13 must provide a practical and reasonable plan to pay off some or all of their debt over a period of time. A Chapter 13 bankruptcy plan lasts for 36 to 60 months depending upon your income. In some circumstances, a debtor may be allowed to change interest rates on loans and/or lengthen payment terms on debts that are not secured by the debtor’s home.
It is up to you and your attorney to provide to the court with a reasonable and fair budget. A “means test” is used to check the reasonableness of the budget. It defines what is “disposable income” (excess income) for your particular situation, based on standards outlined under the U.S. Bankruptcy Code. Any income over your budget is to be paid on a monthly basis to the trustee.
Unsecured creditors have the right to file an objection with the court. If the court accepts your proposed repayment plan, it will be binding upon unsecured creditors.
Once the court confirms a Chapter 13 bankruptcy repayment plan it becomes effective. It is up to the debtor to make sure that regular payments are made to the Chapter 13 trustee, who pays the creditors of the Chapter 13 plan.
Please call me today at (801) 432-8682 to discuss your specific situation and how Bankruptcy may be right for you.