Chapter 13 Bankruptcy: Payment Plan

In a previous post, I stated that many people who are considering bankruptcy are hoping to file a Chapter 7 bankruptcy.

A Chapter 7 bankruptcy isn’t the best fit for all bankruptcy filers, though. In this post I will explain the basics of a Chapter 13 bankruptcy.

There are similarities between Chapter 13 bankruptcy and Chapter 7 bankruptcy. In both cases, you have to file a bankruptcy petition with the Court and you need to meet with a bankruptcy trustee as part of the process.

A Chapter 13 requires you to file additional paperwork with the Court: you need to file a Chapter 13 plan. In the Chapter 13 plan, you lay out your plan for paying back some or all of your debts during the next 3-5 years. In order to draft your Chapter 13 plan, your attorney will need information about your income and expenses, as well as your debts and assets.

The kinds of debts and amounts of debts that you have (priority debts, secured debts, unsecured debts), and your assets (Would any of them be non-exempt in a Chapter 7 bankruptcy?), as well as your income and expenses, will determine your proposed Chapter 13 payment.

Additionally, whether or not you pass the means test will determine whether your Chapter 13 plan will be a three-year or a five-year plan.

Your Chapter 13 Plan will also need to be confirmed (approved) by the bankruptcy court.

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether Chapter 7 or Chapter 13 bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to to schedule a consultation.

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