Maintaining a Chapter 13 bankruptcy

Chapter 13 bankruptcy is a reorganization of debt, and it may be a a viable alternative for Florida residents who have a steady income but who are still struggling with their obligations. Debts are repaid pursuant to a court-approved plan that lasts three years for people making less than or right at the median income for their state and five years for those making more. The court uses the filer’s average income over the past six months to make this determination.

When filing the bankruptcy petition, the debtor must include a $235 filing fee and a $75 administrative fee.The court will allow the debtor to pay these fees in installments within 120 days of filing the petition. The debtor could also file an extension to allow 180 days for fee payment. In any case, the debtor must begin making payments through the bankruptcy trustee whom the court appointed within 30 days of filing the petition. If the court denies the claim, the trustee will return these payments after deducting administrative costs.

The debtor must repay priority unsecured debts, such as child support and wages that are owed to employees, in full over the course of the bankruptcy. The debtor must also make any overdue payments on secured debts that will continue after the bankruptcy, such as mortgages and pay off other secured debts, such as tax liens and promissory notes that are secured by personal property. Any other disposable income must go toward paying unsecured debts, including credit card balances and medical bills.

When a person is interested in filing under Chapter 13 a lawyer could assist with preparing the petition and repayment plan. Not everyone is eligible for this chapter, however, and there are certain things such as credit counseling that for the most part must be completed in advance.