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One of the main features of Chapter 13 bankruptcy is the option for a debtor to create a structured payment plan to repay their creditors over a period of three or five years. A Chattanooga bankruptcy lawyer could help someone who wants to file a Chapter 13 claim draft this plan so that it receives court approval and the debtor can begin the process of regaining control over your finances.
If you are facing serious debt and are thinking of applying for bankruptcy, a skilled attorney could take on your case and ensure that you complete all of the required steps to create a Chapter 13 bankruptcy payment plans in Chattanooga accurately and efficiently.
A debtor should already have enlisted the help of a local attorney before they begin drafting their bankruptcy plan. A legal professional could ensure that the plan is pursuant to the official bankruptcy code and addresses the debtor’s needs and ability to make complete and timely payments.
The bankruptcy trustee, who works as a facilitator of the bankruptcy process between the debtor and the creditors in Chapter 13 cases, will approve a debtor’s bankruptcy plan before sending it to the court. They can also offer advice on the length of the plan and suggest that the debtor makes their payments over three years or five.
The bankruptcy plan also must note that the debtor is attending credit counseling, so the trustee and the court will know that they are working on developing new financial management skills that could prevent them from getting in this position again.
To calculate the exact monetary amount of the payments in a Chapter 13 plan, a trustee will examine the debtor’s financial statements and calculate the disposable income. The plan can be then be based on how much disposable income a debtor, as that is what will primarily be used to make the payments.
Disposable income can be calculated by deducting allowable expenses from the debtor’s income, which results in a figure that can give an idea of what the bankruptcy payment amount should look like. Usually, this figure is how much is left after the debtor pays all of their bills. Social security payments are never included in the income, and child support and alimony payments can be deducted.
Marital status can also be a factor in the income calculation, as can the number of people in the debtor’s home, and both can allow for more exemptions and discharges of debt.
If the debtor’s income reduces or increases during the timeline of their bankruptcy plan, they have to notify the trustee as soon as that happens. Sometimes, the plan may need to be restructured or converted into a Chapter 7 case.
Debts are also an important factor when calculating the plan’s exact payment amount.
Secured debts, such as mortgages, are tied to a piece of collateral and have to be paid in full throughout their payment plan. The debtor must propose a plan that pays off the secured debts within 60 months regardless of their income and expenses. As long as they debtor is making the mortgage payments and any arrears are included in the Chapter 13 plan, their house cannot be foreclosed upon, as the automatic stay would prevent that.
These debts are different than unsecured debts that have no physical collateral that can be repossessed if the debtor does not make payments. Student loans fall under this category, and both kinds of debt need to be taken into account when creating the payment plan. A lawyer in the area could ensure that all of a person’s debts are represented accurately in the official bankruptcy plan.
It is also crucial to determine priority debts when creating a plan, as these debts have first priority for payments, like child support or spousal support. They have to be paid before the unsecured or the non-priority debt, and there is no way to get rid of them. This, along with other debt requirements, would need to be reflected in the payment plan.
Calculating an effective payment plan is one of the most crucial steps when filing for Chapter 13 bankruptcy. The process to do so is often complex, so it may be beneficial to have a knowledgeable legal professional at your side when you are determining the schedule and monetary amount of your payments. With the help of a Chattanooga bankruptcy attorney, you could fulfill the necessary requirements for your filing and reach a bankruptcy plan that you will be able to adhere to over the next few years. Call today to schedule a consultation and start creating Chapter 13 bankruptcy payment plans in Chattanooga.