When filing Chapter 13 bankruptcy, the debtor agrees to repay their creditors over the course of 3 to 5 years. The amount that the debtor pays will include both their secured and unsecured debts; however, they may only be required to pay part of their unsecured debts with the balance being discharged at the end of their bankruptcy repayment period. Below are a few rules Chapter 13 bankruptcy debtors should know about making payments into their plan:
- Each Chapter 13 bankruptcy debtor is required to create a repayment plan for their creditors. This payment plan must be approved by the Chapter 13 bankruptcy trustee and must not favor one creditor unfairly over another.
- While one creditor may not be favored by the debtor over others, the bankruptcy court does prioritize debts giving some more opportunity to get paid than others. For example, a child support creditor would receive a higher priority than a credit card debt and federal tax debt would get paid before a parking ticket.
- The bankruptcy trustee will receive payments from the debtor and distribute the payments to creditors based on their priority level. Debtors in Chapter 13 bankruptcy will agree to pay a certain amount of money every month by a certain date.
- Chapter 13 bankruptcy debtors must make their monthly payments every month and in a timely manner. If the bankruptcy debtor fails to make their payments on time or misses a payment, their bankruptcy case could be dismissed.
- The first payment of a debtor’s Chapter 13 bankruptcy must be made no later than 30 days after the debtor has filed their repayment plan.