» Chapter 13

I'm having trouble making my payments on time. What can I do?

You have the option of utilizing a payroll deduction to pay your court-appointed trustee. This may help you make your payments on time, and help you avoid a dismissal of your case due to a failure to adhere to your plan.

What happens if I can't complete my repayment plan?

Completing a Chapter 13 repayment plan can be difficult; some statistics say 90% of Chapter 13 bankruptcies fail. However, once the court has confirmed your plan, you are legally bound to adhere to the payments and schedule set forth within it. If circumstances arise that are outside of your control, you may be eligible for a "hardship discharge." An experienced bankruptcy attorney can advise you of your eligibility for such a discharge.

What happens if my mortgage payment is due before my repayment plan is confirmed?

If this is the case, you would pay your lender directly rather than paying the court-appointed trustee. Typically, once protected by Chapter 13, you make payments to your trustee for purposes of disbursement to creditors. However, if the court has not yet confirmed your plan, you would continue to interact with your lender yourself. The amount paid would then be deducted from the amount you would have paid the court-appointed trustee.

What is considered "disposable income"?

"In chapter 13, 'disposable income' is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance or support of the debtor or dependents and less charitable contributions up to 15% of the debtor's gross income. If the debtor operates a business, the definition of disposable income excludes those amounts which are necessary for ordinary operating expenses." (11 U.S.C. § 1325(b)(2)(A) and (B))

Do I have to repay all my debts in full?

According to the Bankruptcy Code, your "plan need not pay unsecured claims in full as long as it provides that the debtor will pay all projected 'disposable income' over an 'applicable commitment period,' and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under Chapter 7." (11 U.S.C. § 1325)

What is a discharge?

A discharge of a debt means you are no longer liable for that debt. Under Chapter 13, you generally must complete your court-approved repayment plan in order to obtain a discharge.

What are the goals of a Chapter 13 bankruptcy?

A bankruptcy under Chapter 13 is a structured repayment plan designed to save your house from foreclosure, other property from repossession, or (in some instances) to lower your payments on existing debts.