Lefkovitz & Lefkovitz
Nashville Office
615-686-2279
Cookeville Office
931-400-2218
Serving all of Middle Tennessee's Bankruptcy Needs
We help individuals and businesses find the right solution to their money problems.

How is debt repaid in Chapter 13 bankruptcy?

Filing for bankruptcy protection is not typically something people do on a whim. Making this decision requires thoughtful consideration, research and a thorough understanding of the types of debt under which a person is buried. There are several different options for bankruptcy, and finding the right one for your individual circumstances can be crucial in achieving your goals of pursuing financial stability.

For example, people with extensive credit card debt and no substantial income may want to pursue Chapter 7 bankruptcy, as it will allow them to have all or most of their debts discharged. But if you are still working and making money but are struggling to pay your mortgage and other debts, Chapter 13 may be a more appropriate solution. Under the terms of Chapter 13, you will be able to repay debts rather than have them discharged. This is done by developing a repayment plan.

A repayment plan is, essentially, a restructuring of your debts. Prioritizing debt and establishing a fixed amount that will be paid can help people tackle their debt in stages. First, you will likely need to pay off the high-priority debts, including taxes. Next in line to be paid are secured debts, including a mortgage or any other type of debt involving collateral. Finally, unsecured debts, which include credit card debt, are addressed.

You do not need to develop a repayment plan on your own. In fact, as specified in federal bankruptcy laws, you will need to work with a trustee and your creditors to find an agreeable plan that a court will ultimately have to approve. Once this plan is in place, it is up to you to stick with the terms that have been set and stay current on payments.

While creditors may not always recover all the debt you owe, they can recover a significant portion of it which can be much preferable to collecting little or nothing if you were to have the entire debt discharged in Chapter 7.

Chapter 13 bankruptcy can be an excellent solution for people who are earning money and have the means and ability to stick with a new repayment plan. In order to explore whether Chapter 13 might be right for you or not, it can be important to discuss your situation and goals with an attorney.

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Nashville Office
618 Church Street, Suite 410
Nashville, TN 37219

Phone: 931-400-2218
Fax: 615-255-4516
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Cookeville Office
312 East Broad Street, Suite A
Cookeville, TN 38501

Phone: 931-400-2218
Fax: 931-526-6244
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