When you file chapter 13 bankruptcy, you are required to make your first payment within 30 days of filing for bankruptcy. If the bankruptcy judge confirms your plan, your payment will be dispersed to your creditors. If your plan never gets approved and your case is dismissed, your payments will be returned to you, minus any administrative fees.
If your plan is approved, you will typically make one monthly payment to your trustee. Sometimes a trustee will ask you to set up the payments to come directly from your bank account or paycheck. The trustee will pay your creditors according to the plan. The trustee will also collect a fee of approximately 8% to 10% of the amount you pay for their services.
If Something Goes Wrong
If something affects your income and you are unable to make a payment or two, you can usually make arrangements with your trustee. If you are unable to complete your plan, you may be able to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy. You can also ask the judge to grant a hardship discharge for your case. The more common outcome is that your case will be dismissed.
If Your Case is Dismissed
If you are unable to complete your plan and unable to file Chapter 7 instead, you will owe the balance due to your creditors.
If you need more information on chapter 13 bankruptcy are you would like to eliminate your qualifying debt contact a Rio Grande bankruptcy attorney.