The Chapter 13 process allows you to reorganize your finances. You must have a regular source of income and submit a repayment plan setting forth how you intend to pay your creditors. A repayment plan lasts 3 to 5 years and it must be approved by the bankruptcy court. You will make monthly payments to the chapter 13 trustee who distributes the funds to your creditors according to the terms of your plan.
Bankruptcy law prioritizes your debt. Your Chapter 13 plan must pay your creditors according to their priority. The following are the three types of claims by a creditor:
•Priority Claims, such as taxes and child support arrearages, are granted special status by the law. Your plan typically must pay the full amount of priority claims.
•Secured Claims are debt or loans that have provided the creditor with a lien on an asset or piece of real property. The two most common secured creditors in personal bankruptcies are your mortgage lender and the creditor on your vehicle loan. Some car loans must be paid in full, but others can be “crammed down” to the value of the vehicle. The “cram down” will be discussed further in future blogs
•Unsecured Claims can be paid partially, fully or not paid at all. As long as you pay all of your projected “disposable income” over an “applicable commitment period.” Additionally, the unsecured creditors must receive at least as much under the plan as they would receive if your assets were liquidated under Chapter 7.
Chapter 13 cases involve strategic planning and knowledge of the law. Contact a skilled lawyer at DeLadurantey Law Office, LLC to schedule your initial consultation.
If you are considering filing for bankruptcy protection, let us help. We understand how important your bankruptcy case is to you, and we will handle it with the discretion and dedication that have become our calling cards. Contact the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC today by calling 414-377-0518.