Filing for Chapter 13 bankruptcy may allow Florida debtors to retain more property than they would otherwise be able to keep in a Chapter 7 bankruptcy. Unlike Chapter 7 bankruptcy, Chapter 13 cases do not involve liquidating assets. Instead, debtors are required to repay a portion of their debts over a period lasting from 3 to 5 years.
When a petition for Chapter 13 bankruptcy is filed, the debtor must also submit a proposed repayment plan. It is important that a debtor is careful when preparing plan because it must be confirmed by the bankruptcy court. If the court does not approve the plan, then the case may be dismissed or converted to a Chapter 7 bankruptcy proceeding instead.
Three types of debts are repaid during the plan. Priority debts, such as taxes, must be repaid in full over the life of the repayment period. Secured debt payments must be made for secured property that the debtor wants to keep such as a vehicle. The amount of the payments for secured debts must be at least the value of the property that is securing the creditor’s interest. The debtor’s unsecured debt payments should be in at least the amount the creditors would have received if the debtor had instead filed a Chapter 7 petition.
Chapter 13 bankruptcy can help debtors to stop repossessions of his their home and other secured property. The repayment plan is very important. If it does not provide for the debtor’s paying off debts according to the requirements, the plan may be denied and the case dismissed. People may therefore want to get help from a bankruptcy lawyer with drafting their petitions and their repayment plans.