Unlike Chapter 7, a Chapter 13 involves a repayment plan to submit for court approval in which the individual can repay its debts. A proposal is offered in which the individual will make monthly payments to creditors over the course of 3 to 5 years.
The state median’s income plays an important part in the repayment plan. If an individual’s income is less than the state median, then the repayment plan is generally three years. If an individual’s income is more than the state median, then the plan is usually five years.
No plans can exceed 5 years.
What are the advantages of a Chapter 13?
The primary advantage is that a Chapter 13 would save your home from a foreclosure. While you may not lose your home in a Chapter 7, Chapter 13 affords the individual to restructure mortgage payments to save your home and make up delinquent payments. It would also halt foreclosure.
Another advantage is it allows the individual to repay secured debts and restructure them so that you could pay them back over the course of your plan.
Also, the payment plan means that you do not have to deal with your creditors directly as you would make payments to a Chapter 13 trustee.
What must you file with the court?
– Schedules of assets and liabilities
– Schedule of current income and expenditures
– Schedule of executory contracts and unexpired leases
– Statement of financial affairs
How much does it cost?
A Chapter 13 filing fee is $281 in the US Bankruptcy Court of Western Washington
When must you file the plan?
At the time of filing the Chapter 13 petition or 14 days after filing.
When do you start paying creditors?
Within 30 days after filing the bankruptcy petition, you must start making payments (per your plan) to the trustee even though the court may not have confirmed the plan.
What is a Confirmation Hearing?
No less than 45 days after the petition is filed, the court will have a hearing to determine whether the plan is adequate. Creditors will have 28 days’ notice to object to the confirmation.