Of the two common bankruptcy options available to individual filers, Chapter 13 is the more varied and personalized code applicable to your debts. The repayment plan established when you file for Chapter 13 is unique to your own case, and it may be very different from the repayment plan of another individual. The financial situation—the balance of debts, income, and assets—of the individual dictates how the repayment plan is structured. Behm Law Group can offer legal advice and assistance to help you determine how your repayment plan will affect you during your petition for Chapter 13 bankruptcy in Windom, MN.
To understand how your repayment plan will resolve your financial situation, you must first look at how each type of debt is considered in Chapter 13 bankruptcy.
Priority debts are always included in a repayment plan. This means you will have to pay back the entirety of all your priority debts. The benefit of having a repayment plan is that this payback will happen little by little, usually at no interest, with payments that fit your unique financial situation. Priority debts include child support, alimony, and tax debts incurred in the last 3 years, compensation owed to your employees, or money you owe to an employee fund. These debts are not subject to discharge with any form of bankruptcy.
Secured debts are an optional part of your repayment plan. These debts include properties you owe payments for, such as vehicles or homes. If you want to keep any properties bound by secured debt, you will have to include the present value of the property securing that debt in your repayment plan and repay that value over time. Sometimes the value of the property securing a debt is a lot less than the amount of the debt itself. In such a case, you only have to pay the actual value of the property. For example, if you owe $15,000.00 on a vehicle that is presently worth $5,000.00 and the debt on the vehicle is more than 910 days old, all you would have to pay is $5,000.00. Tax liens are also considered secured debts that you must pay back within a Chapter 13 bankruptcy plan.
Unsecured debts vary the most when it comes to determining the right repayment plan for you. What you will pay back on unsecured debts is decided based on the balance of your nonexempt properties with your disposable income and the total period of your repayment plan. These unsecured debts include credit debt, medical bills, and several other forms of consumer or non-property debts.
As a side note, you will also have to pay the entirety of your bankruptcy fees for the process of filing for Chapter 13 bankruptcy. This includes trustee compensation and any fees due to your bankruptcy attorney.
The comprehensive help that Behm Law Group, Ltd. offers with our expert bankruptcy attorneys can be key in guiding you through the process of filing for Chapter 13 bankruptcy in Windom, MN. For more information, contact us at (507) 387-7200 today.