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Making a Successful Chapter 13 Repayment Plan

In these tough economic times, it is not uncommon for people with stable income to be overburdened by debt. If you spend most (if not all) of your paycheck on payments to creditors, if your mortgage lender has threatened to foreclose on your home, or if you have received notice that your wages will be garnished, you may want to consider filing bankruptcy. The Chapter 13 bankruptcy laws in Georgia allow you retain your valuable property without creditor harassment.  If you qualify, you may create an affordable debt repayment plan.

How the Chapter 13 repayment plan works

Under Chapter 13, you may structure payments to your creditors over a period of 36 to 48 months.  First, you must calculate the amount of your disposable income to determine the amount of money you have to make payments. The formula for disposable income takes into account several factors, including your necessary living expenses, mortgage payment, car payment, insurance, food, utilities, etc.

The next step is a negotiation process with your creditors. Some creditors will agree to accept less than the full amount owed and others may insist that you pay the full debt amount to the extent of your allowable exemptions. Nevertheless, the Bankruptcy judge must approve your plan to ensure that it is fair to both you and your creditors.

Once the judge approves your plan, you will make payments according to the plan to the Bankruptcy trustee who is assigned to your case.  If you complete all of your payments under your plan and fulfill other requirements, including participation in mandatory money management classes, the bankruptcy court will discharge the debts included in your plan.  This means that you will no longer be liable for those debts.

The success of your repayment plan not only depends on your ability to keep up with your payments but also your adherence to the bankruptcy rules.  Listed below are a few tips to take into consideration:

  • Avoid committing bankruptcy fraud ― Accurately list all of your income, assets and debts on your petition.  You are allowed to amend your petition to correct mistakes. However, intentional misreporting information is considered a criminal offense.
  • Avoid illegal transfers ― If you give away property or cash prior to or after filing for bankruptcy, your bankruptcy case could be dismissed and you could face criminal charges.
  • Avoid spending excessively just prior to filing for bankruptcy ― You may be required to make up for those expenses.
  • Know which debts are non-dischargeable ― Ask your Chapter 13 bankruptcy attorney about exceptions. You'll have to make full payments on most non-dischargeable debts.

You can reach your goal of living debt free with a successful Chapter 13 repayment plan. Your bankruptcy attorney can help you navigate the Bankruptcy Rules.  Contact DebtStoppers, Bankruptcy Law Firm Robert J. Semrad & Assoc., LLC. to get started today.

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