How Does Chapter 13 Work?

The way Chapter 13 works is the Debtor proposes a Chapter 13 Plan to the court. If approved, the Debtor will make monthly payments directly to the Chapter 13 Trustee’s office. The Chapter 13 plan can be used to address delinquent secured debt such as home mortgage or vehicle loans. It will also address your unsecured debt, such as credit card debt and medical bills.

Your “Ability To Pay” Is Key

A part of figuring out “How does Chapter 13 work” is understanding that Chapter 13 requires you to commit your disposable income to your Plan. This means you and your Charlotte bankruptcy attorney will work together to formulate your budget. You are allowed to account for all of your normal living expenses in doing so. The remaining amount becomes the better part of your Plan payment.

Your Chapter 13 Plan Has Components

If you have secured debt, that debt will typically be paid through your Plan. Additionally, you can use Chapter 13 to get ‘caught up’ on secured debt if you’re behind. An example would be making up missed mortgage payments or late car payments. In this case, your disposable income will be used first to catch up on secured debt, and the remainder will go to your unsecured creditors.

To determine an estimate of your Chapter 13 Plan payment, you should really speak with your Charlotte bankruptcy attorney. While it’s possible to file a Chapter 13 bankruptcy without an attorney, it’s typically a very complicated formula. Your bankruptcy attorney will help to assure that your plan is filed in accordance with the rules of Chapter 13. This increases the chance that your plan is recommended for Confirmation by the Chapter 13 Trustee.

Considering Chapter 7 Instead

The primary reasons to file Chapter 13 instead of Chapter 7 are:

Too Much Income

Too Many Assets

You Need To “Catch Up” On Mortgage Or Car Payments

You’ve Already Filed Chapter 7 In The Last 8 Years

Your bankruptcy attorney can help you decide if Chapter 7 or Chapter 13 is right for you. Both options provide you with a great solution to being overwhelmed by debt.

Speak With A Chapter 13 Bankruptcy Attorney Today

If you are considering filing bankruptcy, you should exercise your option to speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful. You’ll find articles about your Credit Score In Bankruptcy, Chapter 7, Bankruptcy And Car Loans, and How Creditors Are Notified About Your Bankruptcy.