There are two main types of bankruptcy that individuals file for: Chapter 7 and Chapter 13. While Chapter 7 is much more common, Chapter 13 has unique advantages that make it ideal in some situations. A Chapter 13 repayment plan helps you repay debts over a longer period of time.
If you’re wondering how the repayment plan works and whether it’s the right choice for you, you’ve come to the right place. Integrity Law Group offers personalized, experienced legal counseling for bankruptcy in Seattle. We can help you use Chapter 13 bankruptcy as a tool to reclaim financial security without losing your home or car. In this blog, we’ll explore the details of the Chapter 13 repayment plan.
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What is Chapter 13 Bankruptcy?
For many people facing overwhelming debt, the stakes are high. What starts as late payment notices and creditor harassment can turn into home foreclosure or car repossession. For some individuals, Chapter 13 bankruptcy is a lifeline that can help you escape debt without losing your home or belongings.
In Chapter 13, the goal is to restructure your debts and pay off as much as you can over time with a repayment plan—no asset liquidation as in Chapter 7. You’ll work with your lawyer to create a repayment plan. With this plan, designated creditors still get paid, but you have more time to repay them without worrying about creditor harassment or losing your home or car. Once you have paid off the agreed-upon amount in your repayment plan, most, if not all, of your remaining debt is discharged.
Understanding the Chapter 13 Repayment Plan
A well-crafted Chapter 13 repayment plan is crucial. You need to consider all your expenses and income to create an accurate, realistic plan for how you’ll pay off your debts. Small mistakes or oversights can have big consequences. That’s why it’s a worthwhile investment to work with a bankruptcy lawyer who can help you make an airtight repayment plan. Our team will help you with every detail to ensure nothing slips through the cracks.
Filing for Chapter 13 Bankruptcy
Before filing for bankruptcy, you’re required to complete pre-filing counseling through a credit counseling agency. From there, it’s highly recommended that you hire an experienced bankruptcy attorney, especially for Chapter 13. We’ll help you with every aspect of the process.
First, we’ll help you fill out the various paperwork to file for bankruptcy and submit your petition. A bankruptcy trustee will be assigned to your case, and you’ll enter an automatic stay that prevents most collection efforts from creditors, including repossession or foreclosure.
Creating and Submitting the Repayment Plan
You must submit a payment plan proposal within 14 days. The Integrity Law Team will help you consider every detail of your financial situation to create a feasible plan that still satisfies your creditors. A Chapter 13 repayment plan must repay creditors an amount determined by your attorney that is feasible within three to five years.
A few weeks after submitting your plan, you, your lawyer, and your trustee will meet with your creditors. They will have an opportunity to object to the plan or request modifications. Within 45 days of this meeting, you’ll meet in court to have the payment plan confirmed.
Making Payments
You must start making payments according to the proposed plan within 30 days of filing, even if the court hasn’t approved it yet. Once it is approved, you must continue making the agreed payments for three to five years. Payments are typically biweekly or monthly and are made to your trustee, who distributes it to your creditors.
If you fail to make payments, your case will likely be dismissed or converted into a Chapter 7 bankruptcy, which could cost you your house or other assets. That’s one of the reasons it’s so important to get experienced help making a repayment plan that’s realistic for you.
After the Chapter 13 Repayment Plan is Complete
Once you complete the Chapter 13 repayment plan, most, if not all, debts will be discharged. Some debts, like tax obligations, alimony, or student loans, may not be discharged.
A Chapter 13 bankruptcy stays on your credit score for seven years, whereas Chapter 7 stays for ten years. Since it also gives you a history of payments, one of the benefits of Chapter 13 is that it has less long-term effect on your financial well-being.
Why Work with Integrity Law Group in Seattle?
When you’re navigating a complex, high-stakes situation like bankruptcy, you need a knowledgeable ally to help you reach the other side and protect you from common pitfalls along the way. That’s exactly how we can help at Integrity Law Group. You can count on us for:
Experience: We’ve been helping the Seattle community with dedicated legal counsel since 2008. With a focus on bankruptcy, our team has the experience and know-how to lead you to a successful outcome, carefully considering every detail and protecting your best interests at every step.
Comprehensive legal guidance: There are a lot of details and elements to consider in a bankruptcy case, and we help with all of them. You can count on our team for support and guidance with every aspect of your case. No detail is too small, and we’re always here to answer your questions.
Personalized, caring support: Your lawyer shouldn’t just be knowledgeable and skilled—they should be someone you can trust. At Integrity Law Group, we’re passionate about what we do and committed to helping our clients. We take a personalized approach to every client, understanding that everyone’s situation and needs are unique.
Get Help with a Chapter 13 Repayment Plan Today
Bankruptcy is complex and overwhelming, especially under Chapter 13. Working with an experienced bankruptcy attorney is the best way to find a personalized, effective path to financial freedom. We can help you save your home, create a realistic Chapter 13 repayment plan, and navigate any obstacles along the way. Contact Integrity Law Group today to consult a bankruptcy lawyer in Seattle.