When you are looking for debt relief, bankruptcy is one of the many options available to you. Each option has its own benefits and potential drawbacks. It is important to carefully examine each one and come to a conclusion about which suits your situation the best.
When you decide to go with Chapter 13 bankruptcy, know that there are several duties you must fulfill. But what are they?
Repay your creditors
The United States Courts look at Chapter 13 bankruptcy basics. It also discusses your duties and obligations under Chapter 13 bankruptcy. First, you must pay filing fees and other fees as you start the process.
Above all, your main obligation is to repay the debts you owe. Chapter 13 is a repayment plan. Unlike Chapter 7, you must continue to repay your debts. Many plans involve monthly or bimonthly payments. You work with a financial advisor to come up with a reasonable payment amount. Then, you must stick with it.
Order of repayment
You must repay your creditors in order. First come priority debts, like alimony or child support. After that come secured debts. Finally, you must pay unsecured debts in a way equal to your disposable income. This includes credit card debt and medical debt. During the bankruptcy process, all disposable income goes toward paying off these creditors.
It is crucial to note that there is no second chance on Chapter 13 bankruptcy. If you cannot repay your debts, you cannot file for another type of bankruptcy for a period of years. Thus, it is crucial to maintain your responsibilities once you file.