Call Us Today: 229-888-1105
Address: 417 Pine Ave. Albany, GA 31701
Blog Layout
What to Know About Chapter 13 Repayment
Apr 24, 2020
This is a subtitle for your new post
Many American struggle with debt, and as they try to get out of it, more and more bills only pull them under. Luckily, bankruptcy is a legal and realistic way to remove or restructure much of your debt. If you are ready to start improving your financial situation, keep reading to learn more about the Chapter 13 repayment period.
How Long Does the Repayment Period Last?
The repayment plan for Chapter 13 bankruptcy can last three to five years . In most cases, you can only propose a three-year repayment plan if your income is below the state median. Naturally, however, the shorter the repayment plan, the higher the monthly payment, and people with a lower income may not have enough to pay this high payment.
For this reason, many people still choose to take the full five years for their repayment plan. If you have the extra money, you may be able to get a repayment plan shorter than three years. You will only qualify for this, however, if you can and will repay the full amount you owe on unsecured debts.
How Much Do You Have to Repay?
Depending on your situation, the amount of money you repay can significantly vary. While some people choose to repay the full debt, others end up paying zero percent of unsecured debts. The leading factor that determines how much you pay is the "best interest of the creditors." In other words, it means the creditors won't get less because you filed for Chapter 13 instead of Chapter 7.
In Chapter 7, unsecured creditors get some money back after your nonexempt property is sold (excluding property you need to work and live). In Chapter 13, you keep your nonexempt property, so the only way lenders get any money is via your repayment plan. Of course, the courts will consider your disposable income so you don't pay more than you can afford.
How Does Repayment Affect Your Credit Score?
Both Chapter 13 and Chapter 7 bankruptcy negatively impact your credit score about the same. However, after bankruptcy, you will be free to start taking out loans again. In fact, getting credit cards and loans after bankruptcy is one of the best ways to rebuild your credit. As long as you keep the balances low and pay bills on time, your score should quickly rise.
Even with a low credit score, however, lenders may be more willing to lend to people with a Chapter 13 bankruptcy vs a Chapter 7. The lender may feel more comfortable with someone who tried to make a good faith effort to repay some of the debt.
Can You Save Money During Repayment?
If you have extra money, you should always try saving money, even during the Chapter 13 repayment plan. It can help if you fall behind a few months, or it can serve as financial support after you get out of bankruptcy. Plus, having extra disposable income will help get loans after your bankruptcy to boost your credit score. If you get a new job or promotion, and your income changes, your plan may change too. This is because the plan depends on how much disposable income you have. If you suddenly have more disposable income, your repayment may increase. On the other hand, if you have to take a job with a lower salary, you may be able to reduce your repayments. Typically, a change in salary doesn't affect 100 percent repayment plans.
Bankruptcy is a major decision, but it can be what you need to finally get your finances under control. With Chapter 13, you may have to repay some or all of the debt, unless you qualify for a zero repayment plan. If you would like to know more about bankruptcy and repayment, contact us at Custer, Custer and Clark LLC Attorneys at Law.
How Long Does the Repayment Period Last?
The repayment plan for Chapter 13 bankruptcy can last three to five years . In most cases, you can only propose a three-year repayment plan if your income is below the state median. Naturally, however, the shorter the repayment plan, the higher the monthly payment, and people with a lower income may not have enough to pay this high payment.
For this reason, many people still choose to take the full five years for their repayment plan. If you have the extra money, you may be able to get a repayment plan shorter than three years. You will only qualify for this, however, if you can and will repay the full amount you owe on unsecured debts.
How Much Do You Have to Repay?
Depending on your situation, the amount of money you repay can significantly vary. While some people choose to repay the full debt, others end up paying zero percent of unsecured debts. The leading factor that determines how much you pay is the "best interest of the creditors." In other words, it means the creditors won't get less because you filed for Chapter 13 instead of Chapter 7.
In Chapter 7, unsecured creditors get some money back after your nonexempt property is sold (excluding property you need to work and live). In Chapter 13, you keep your nonexempt property, so the only way lenders get any money is via your repayment plan. Of course, the courts will consider your disposable income so you don't pay more than you can afford.
How Does Repayment Affect Your Credit Score?
Both Chapter 13 and Chapter 7 bankruptcy negatively impact your credit score about the same. However, after bankruptcy, you will be free to start taking out loans again. In fact, getting credit cards and loans after bankruptcy is one of the best ways to rebuild your credit. As long as you keep the balances low and pay bills on time, your score should quickly rise.
Even with a low credit score, however, lenders may be more willing to lend to people with a Chapter 13 bankruptcy vs a Chapter 7. The lender may feel more comfortable with someone who tried to make a good faith effort to repay some of the debt.
Can You Save Money During Repayment?
If you have extra money, you should always try saving money, even during the Chapter 13 repayment plan. It can help if you fall behind a few months, or it can serve as financial support after you get out of bankruptcy. Plus, having extra disposable income will help get loans after your bankruptcy to boost your credit score. If you get a new job or promotion, and your income changes, your plan may change too. This is because the plan depends on how much disposable income you have. If you suddenly have more disposable income, your repayment may increase. On the other hand, if you have to take a job with a lower salary, you may be able to reduce your repayments. Typically, a change in salary doesn't affect 100 percent repayment plans.
Bankruptcy is a major decision, but it can be what you need to finally get your finances under control. With Chapter 13, you may have to repay some or all of the debt, unless you qualify for a zero repayment plan. If you would like to know more about bankruptcy and repayment, contact us at Custer, Custer and Clark LLC Attorneys at Law.
Filing for bankruptcy can help you get rid of most of your debts, if you are careful. Here are common bankruptcy mistakes to avoid as you file.
Even the most financially disciplined and prudent individuals can find themselves in debt. And sometimes, the best way out of unmanageable debts is to file for bankruptcy.
Filing for Chapter 7 bankruptcy can be a complicated process. Learn what documents are required and what documents will help your case.
Some individuals shy away from talking about bankruptcy because of all the myths surrounding it. Learn the truth by reading this blog.
If you want to take a house loan, lenders look at different factors, including bankruptcy status. Read on to learn about getting a mortgage post-bankruptcy.
Can you improve your credit score during chapter 13 bankruptcy? You can. Discover some tips to help you enhance your credit score.
Do you plan to file bankruptcy but also need to — or choose to — move at the same time? Discover a few important answers to common questions.
Two key elements of bankruptcy work together to protect your assets. Read on to learn what you need to know about exemptions and equity in bankruptcy.
One often-overlooked element of all bankruptcy filings is the automatic stay. What is this stay? How can it help you? Discover a few answers.
Bankruptcy cases don't always go as planned. Job loss is one adverse situation that can affect your bankruptcy. Learn more about the effects.