Each kind of bankruptcy has different rules and requirements. Chapter 13 bankruptcy is a popular form of personal bankruptcy that people also call a wage earner’s plan.
Those with higher incomes can still qualify for Chapter 13 bankruptcy, which allows them to protect their property like the equity in their home. Higher income levels are also acceptable, unlike in Chapter 7 bankruptcy, which features strict income limitations and the requirement to liquidate non-exempt personal property.
One of the cornerstones of a Chapter 13 filing is a repayment plan for your unsecured debts. Who decides which creditors you have to make payments to and how much you have to pay?
The trustee has the ultimate say in your repayment plan
Before you establish the repayment plan for your Chapter 13 filing, you first have to attend a creditor meeting. You will have to disclose financial records and information about your assets before this meeting.
You, your attorney, the court-appointed trustee and representatives from your creditors will all sit down to go over your financial records. Your creditors and the trustee can ask you questions. Once everyone understands your financial circumstances, the trustee can then determine the exact structure for your repayment plan.
You will make one payment a month, which will likely require almost all of your disposable income after meeting your other expenses. The payments go directly to the trustee, who distributes the funds to your creditors. After making payments for three to five years, you can then receive a discharge of the remaining balances on those debts.
Learning more about Chapter 13 bankruptcy can help you decide if it is the right choice for you.