Chapter 13 bankruptcy offers numerous benefits for those struggling financially. You won’t have to liquidate your assets before your discharge, which means you can still file when you have significant personal assets. You also qualify to file while earning substantially more than the state median income for your household size.
When you file for Chapter 13 bankruptcy, you have to complete a repayment plan before the courts discharge your debts. This repayment plan will likely consume almost all of your disposable income for several years.
Your unsecured creditors who will be affected by the bankruptcy can attend a hearing and request their inclusion in the repayment plan for your bankruptcy filing. You will then make monthly payments determined by the outcome of that meeting. Who determines how much you pay to what companies during your Chapter 13 repayment plan?
The trustee establishes and distributes your monthly payment
One of the first things to happen after someone files for Chapter 13 bankruptcy is the appointment of a trustee. The trustee helps organize the creditor meeting. The trustee and representatives from the various creditors affected by the bankruptcy will meet with the person filing to review financial statements and craft a repayment plan.
After deciding who should receive what amounts from the monthly payment, the trustee will be the one who receives that payment every month. It is their job to distribute the appropriate amount to the individual creditors, making compliance simpler for the person who filed. They simply need to send one payment to the trustee.
Familiarizing yourself with the unique requirements of Chapter 13 bankruptcy can help you make the most of the process.