Creditors who are assured that a substantial portion of their loan may be repaid, based on the debtor's ability to repay over a period of time, view Chapter 13 bankruptcy as an increasingly viable option.
The first thing you need to know about chapter 13 bankruptcy rules is that when you file for bankruptcy, an automatic stay goes into effect; creditors can no longer harass you to repay. A trustee is appointed by the court to deal with your creditors in consultation with your counsel.
Your bankruptcy attorney can negotiate a reasonable repayment plan with your creditors on your behalf. It is crucial that you discuss your financial situation with your bankruptcy attorney prior to filing, as this will assist the trustee in determining a reasonable repayment plan to pay off your creditors within three to five years.
In accordance with chapter 13 bankruptcy regulations, you will be required to make monthly payments to the trustee beginning one month after you file for bankruptcy. On your behalf, the trustee is responsible for making payments to creditors. Until the courts sanction a repayment plan, the trustee will hold the accrued payment in preparation for repayment. Typically, the trustee receives a percentage of the amount repaid; therefore, you may need to discuss this with your creditors if they are unwilling to disregard this and insist that you pay them in full.
The laws of Chapter 13 bankruptcy accord priority to secured debts, such as mortgages, and priority creditors, such as child support payments and the Internal Revenue Service. Unsecured debts are repaid last, and there is a high chance that they will either not be repaid at all or will be repaid near the end of the repayment period. If your unsecured debt is sold to a debt collection agency, you will be notified.""
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