Consumers who find themselves unable to get out of an oppressive debt situation might seek bankruptcy protection. Illinois consumers may attempt to file for Chapter 7 liquidation bankruptcy but not qualify based on a means test. That does not mean they cannot explore options under federal bankruptcy laws. Chapter 13 bankruptcy could be a possible solution; it requires making and following a repayment plan.
The repayment plan for Chapter 13
With Chapter 13 bankruptcy, the consumer provides the court with a repayment plan. Such plans usually run from three to five years and require the court’s approval. The plan allows the consumer to pay back a portion of debts owed to creditors.
Not all debt finds its way to the repayment plan. The court may discharge some unsecured debts, meaning the consumer no longer has any obligation to pay them. Credit card debt could face a discharge in some cases.
How much someone pays every month varies depending on the amount of the debt and the need to pay household and other essential expenses. When submitting a repayment plan proposal, the consumer will benefit from thinking things through carefully.
Staying true to the repayment plan
Submitting a Chapter 13 repayment plan involves more than a judge approving or disapproving it. Creditors might voice their disagreement and even sway the judge’s decision. For this reason, crafting a workable and acceptable plan is advisable. The same holds true when it comes time to make the promised payments.
Failing to make payments could lead to trouble. The trustee could report the missed payments to the courts and file a motion to dismiss. If the judge dismisses the bankruptcy, the creditor may discover that previously discharged debt becomes due once again, and collection action might commence.
Anyone who files for Chapter 13 bankruptcy must carefully follow the terms of their repayment plan. Upon completion of the repayment term, they may be able to have all remaining debt discharged.