Monday, September 23, 2013

Will I Need to Make Payments in a Chapter 13 Bankruptcy?

If You File Chapter 13 Bankruptcy in Georgia Will You Need To Make Payments?

Establishing a payment plan is the main difference between filing chapter 13 bankruptcy and filing chapter 7 bankruptcy. Your payment plan must be submitted either with the initial bankruptcy filing or within 15 days later.

Your payment plan must meet court approval, and it must include fixed-amount payments to the plan trustee. These payments must be set for a regular schedule.
Your payment plan will treat different creditors in different ways. In Chapter 13 bankruptcy, there are 3 primary types of creditors.

Priority. These are the creditors whose claims generally must be paid in full, or they may agree to a lower amount (such as recent tax debt and child support payments).

Secured. These are creditors who have secured the right to take certain property from you if you do not pay. If you want to keep your property, you must pay these creditors (such as mortgage arrears or car payments).

Unsecured.  One common example of a unsecured lender is a credit card company. Under Chapter 13, many people qualify not to have to pay these creditors at all.

When the plan is approved by the court, its terms are binding to you and your creditors alike. You will need  to make the regular payments to the trustee either directly or through payroll deductions. Payroll deductions can be a good idea due to the likelihood that the payments will be made on time and in sufficient amounts.

Once your plan is approved, make your scheduled payments. If you think you are going to miss a payment, be sure to inform your attorney. Failure to do so may lead to dismissal of the bankruptcy protection. Bankruptcy on your own can be difficult; we can help.
Call King and King bankruptcy attorneys for a free consultation today 404-524-6400 or visit us at