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What is the "repayment plan" in a Chapter 13 bankruptcy?

For consumers in Tennessee, there are two main options when filing for bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is known as liquidation bankruptcy, as filers will generally list all of their non-exempt assets, which are then sold off to repay creditors and then remaining debts are discharged. Chapter 13 bankruptcy is quite a bit different. Chapter 13 bankruptcy includes a repayment plan.

So, what is the repayment plan in a Chapter 13 bankruptcy? Well, for starters, the repayment plan is a crucial part of the bankruptcy filing. It typically needs to be filed either with the original bankruptcy filing or within a very short period of time thereafter. The repayment plan denotes when consistent payments will be made by the filer to the bankruptcy trustee: usually either on biweekly or monthly basis. Those payments are then distributed to the creditors who have been listed in the bankruptcy filing.

It is crucial for Tennessee residents who file for bankruptcy under Chapter 13 to make sure that they make their designated payments. Those who fail to do so may see serious changes to the bankruptcy process, including converting the bankruptcy filing to a Chapter 7 filing.

Filing for bankruptcy can be a good way for Tennessee residents to face their financial challenges. But, there are many different issues and legal requirements that most people need to educate themselves about when it comes to the bankruptcy process so that they can ensure that they get the fresh financial start that they deserve.

Source: FindLaw, "Chapter 13: Repayment Plan and Confirmation Hearing," Accessed April 23, 2017

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

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