How Does a Chapter 13 Plan Work?
A Chapter 13 bankruptcy petition obligates a debtor to repay as much of his debt as he can afford. Should an individual fail to make proper payments on a Chapter 13 plan, the court reserves the right to dismiss the bankruptcy.
Other People Are Reading
-
Features
-
After filing for Chapter 13 bankruptcy, a debtor must propose a tentative Chapter 13 plan to the bankruptcy trustee assigned to the case. The bankruptcy trustee will then evaluate the proposed plan and the debtor's income. The trustee can either accept the plan or reject it. If the plan is rejected, the debtor must adjust the plan and resubmit it.
Time Frame
-
Chapter 13 repayment plans can last from three to five years, but cannot last longer than five years. If an individual can afford to repay creditors early, he may do so, and request an early Chapter 13 discharge from the court.
-
Considerations
-
Every year that the individual spends under the repayment plan, she must submit a copy of her tax return to the bankruptcy trustee. A debtor may request modification of her original plan if her financial situation worsens, or the trustee may require her to pay a greater sum each month if her financial situation improves.
-
References
Resources
- Photo Credit gavel image by Cora Reed from Fotolia.com
