Chapter 13 Bankruptcy Plan

Chapter 13 bankruptcy has certain rules which state that the repayment plan has to be submitted with the petition until and unless the court grants a special extension. Then also it is important to know that maximum time frame to produce a repayment plan in front of the court is 15 days from the date of petition filed. The plan then needs to get approved by the court. More specifically the plan should consist of regular payment to the creditors with fixed amount. The regularity can range from biweekly to monthly payments depending upon various factors like income and expenses incurred by the debtor.

There are three types of claims that can be availed under the repayment plan:

Priority claim

Secured debt

Unsecured debt

The first of all is the priority claim which consists of basically taxes, costs of proceeding towards the bankruptcy court and other such expenses. As an individual your plan should be such that the claims under priority claims should be covered fully unless the creditor itself agrees for different terms and conditions.

The secured debts are those where collateral is pledged against the credit given. The plan has to provide at least the value of the collateral pledged to the holder of the secured claim. Or in case if the secured claim is to buy the collateral (for e.g. home loan) and the debt was incurred in that specific time frame before filing for chapter 13 then plan should have the provision of providing solution to pay the full payment of debt and not just the value of collateral.

For the unsecured claims the debtor need not put up a full payment plan but debtor should commit to pay all projected “disposable income”, excluding the reasonable amount for the welfare of himself or the dependents and the child welfare allowance within the applicable commitment time frame. Usually the unsecured claim creditor should receive those payments which would actually cover the amount that debtor would receive on liquidating the assets under chapter 7.