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Chapter 13 Frequent Questions

What is a Chapter 13 bankruptcy?

Under a Chapter 13 bankruptcy filing, you will be working out a payment plan with your creditors. A Chapter 13 bankruptcy plan allows you to pay mortgage arrears and other secured debt arrears over a three to five year period. It also allows you to pay unsecured debt, usually at a fraction of what is owed, over the same three to five year period. Your payments on those debts would be reduced so that you would have the opportunity to repay your debts over a specific period of time determined by the court.

What is a Section 341 meeting?

A Section 341 meeting, named after a section of the bankruptcy code, is held 1 to 2 months after you file for bankruptcy. This is a meeting where you are questioned under oath by a court-appointed trustee about your financial affairs and the information that you provided in your bankruptcy petition. It is also an opportunity for your creditors to ask you about your case. A Section 341 meeting is held for both Chapter 7 and Chapter 13 cases. In Chapter 13 cases, your attorney will have already filed a repayment plan with the Court. If there is no objection, the plan goes into effect. Normally, there will only be one of these meetings.

Who do I pay and for how long?

You will repay your creditors directly in a specified amount on a specified date. It is important to make your payments promptly, as failing to do so gives the court-appointed trustee and your creditors the right to ask the Court for relief, which might involve the dismissal of your case and the possible seizure of your assets. The length of your payment plan depends on the plan you have worked out, but it is generally 36 months and not longer that 60 months.

How much do I pay an unsecured creditor, like a credit card company?

That will depend on the amount of your monthly disposal income and the amount of money in your budget that remains after payments are made to secured creditors. Oftentimes, unsecured creditors would receive no more than 50% of what is owed and sometimes your unsecured creditors might receive as little as 5 to 10 percent of what they are owed.


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What is a Chapter 7 bankruptcy?

Chapter 7 Bankruptcy is a "liquidation" bankruptcy.

What is a Chapter 13 bankruptcy?

Under a Chapter 13 bankruptcy filing, you will be working out a payment plan with your creditors.


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