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What is a Chapter 13 repayment plan?

Personal bankruptcy is an option for individuals who cannot get out of debt and repay their financial obligations without help. There are different forms of bankruptcy that men and women may choose to pursue, and different forms of bankruptcy can meet the needs of different debtors. For Tennessee residents who earn incomes and can dedicate some of their earnings to the repayment of their debts, Chapter 13 bankruptcy may be a suitable option.

That is because Chapter 13 debtors work toward the discharge of their debts through a repayment plan. After filing for bankruptcy, a Chapter 13 debtor must file a repayment plan with their bankruptcy court. That repayment plan outlines how they will pay off their pending obligations and it must be approved by the creditors that will be paid through the plan.

In some cases, creditors may receive the full repayment of the loans they have extended to the debtor. In other cases, they may agree to take less than they are owed to bring their loans with the debtor to their ends. When a debtor begins to make payments under the repayment plan, they provide money to the trustee assigned to their case and that trustee is then tasked with distributing payments out to the creditors according to the prioritization of their loans.

For individuals who are not able to make payments to their creditors under the terms of their repayment plans, other forms of bankruptcy may be more appropriate for the management of their debts. It is important that debtors speak with knowledgeable bankruptcy attorneys about their options before they start the bankruptcy process so that they are sure to choose the option that is best for them.

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

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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