About Your Chapter 13 Plan

Plan

One of the biggest differences between Chapter 7 and Chapter 13 cases is the repayment plan developed by the court. This plan outlines how your debts will be satisfied to creditors. This plan is important for the successful outcome of your case. Here is what you need to know about a Chapter 13 plan:

How the plan is developed – the bankruptcy court will use the information provided on your petition to develop your Chapter 13 plan. Generally, the court will examine your net worth in terms of assets, income and fund accounts and weigh this against your debt balance. The most important aspect in determining your payment amount is your disposable income, or the amount of income you retain after all of your essential living expenses are paid each month. The court will determine am amount that is deemed affordable based on your disposable income and spread the payments out over the course of up to five years.

Your creditors will be notified— after the court approves your repayment plan a copy of the plan is sent to all of the creditors on your list prior to the 341 Meeting of Creditors. Creditors do have the right to dispute the plan and request changes at the 341 meeting, but many creditors simply accept the plan as it is provided. The plan also rules which debts are considered priority debts, meaning that these are the first to be satisfied with payment above other debts. In many instances, creditors to debts like credit cards and medical bills are the last on the list and may not receive any payment by the end of the case. It is important to note that each filing is unique and, therefore, each Chapter 13 plan is unique.

Changes to your finances are important— the court can change the Chapter 13 plan if your financial situation changes or there is a change to the creditor list. If your income level changes during the course of your Chapter 13 plan, the court can amend your payment amount accordingly. In other words, if you were to be laid off your payment amount would likely decrease. It is important that you become familiar with your plan and report changes to your Tampa bankruptcy attorney. Failing to update the court with information about changes to your income, funds, assets or debts could complicate your case and lead to a dismissal.

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