When filing for Chapter 13 in Tennessee, you must also submit a repayment plan to the court showing how you intend to clear your debts. The amount you will pay monthly or bi-monthly will depend on your income, revenues, and expenses. Here’s how you prepare to pay back Chapter 13.
Chapter 13 repayment plan
Chapter 13 repayment plan is one of the most important parts of a bankruptcy case. It lays out how you will pay your creditors and for how long (somewhere between three to five years). Within 14 days of filing for Chapter 13, you must draw up and present this plan to the court for approval.
Preparing for a repayment plan
When preparing your Chapter 13 repayment plan, there are some debts that you must fully pay back. Thus, the court will want to see how you will do this within 60 months regardless of how much you make or spend. Such debts include:
1. Priority debts
These are debts that the bankruptcy court cannot discharge. They include certain taxes, alimony, child support, and the cost of filing for bankruptcy.
2. Secured debts
These are debts that you took with collateral, like your auto loan or mortgage. So, if you want to keep your car or your house, you must pay back everything you owe in time.
3. Unsecured debts
This includes medical bills, credit card loans, and other personal loans you took without offering collateral. Your plan must also include how you will repay them, but if some arrears remain at the end of Chapter 13, the court may discharge them.
What happens to your non-exempt property?
Non-exempt properties in Chapter 13 bankruptcy are nonpriority unsecured items that you can sell to pay off creditors. They include your timeshare, retirement account, tools you need for your profession, clothing, and household furnishing. Your trustee won’t sell these things, but you must pay an equal amount of the value you owe.
Chapter 13 bankruptcy isn’t designed to make your life hard; rather, it allows you to start a new leaf by restructuring your debts, finances, and how you handle money. It is one of the best tools you could use when in debt.