If you have chosen to move forward with Chapter 13 bankruptcy and qualify for the process, you are helping yourself get your financial difficulties under control. Of course, the proceedings will take a considerable amount of work, and you will need to make sure that you address every step of the process correctly.
Chapter 13 involves repaying your creditors over time in accordance with a court-approved repayment plan. If you deviate from your approved plan, you could put your bankruptcy case in jeopardy. Having the right information may help you create a plan that will obtain court approval and help you get back on financial track.
Addressing creditor claims
Among your outstanding liabilities, you may have three types of creditor claims. Those claims include the following:
- Priority claims: You must pay back the entirety of these claims unless you and a priority creditor come to another type of arrangement.
- Secured claims: With these claims, creditors have the ability to take any property you put up as collateral in the event that you fell behind on payments.
- Unsecured claims: Unsecured claims mean that you did not have any collateral associated with the debt, and creditors cannot seize particular property to cover that debt.
You will need to address each type of debt in your repayment plan.
Creating a plan
As mentioned, you will have to repay your priority claims in full as part of your plan. When you address secured claims, you may have the ability to keep the property offered as collateral, but you must pay your secured creditors at least the value of that collateral. In some cases, you may also have to pay the secured debt in full and not just for collateral value.
With unsecured claims, you will likely not have to pay them in full, but you will need to provide them with at least the same amount that they would have received if you had liquidated your assets with Chapter 7 bankruptcy.
Your plan must also adhere to a number of other standards, and after its creation, you will need to attend a confirmation hearing. The bankruptcy judge will either confirm or reject your plan. If confirmed, you may move forward with the proceedings, but if it is rejected, you may make necessary modifications to your plan.
Trying to come up with a Chapter 13 repayment plan that meets all the necessary standards can be difficult. Fortunately, you can obtain help with your plan and all other aspects of your case by working with a California bankruptcy attorney.