New York residents like you sometimes get into sticky financial situations. Fortunately, there are options for you to get back out. We have already taken a look at the requirements to file for Chapter 13 bankruptcy. Today, we will look at what your obligations are as a debtor who chooses to file for Chapter 13 bankruptcy.
The United States Courts has a page on the basics of Chapter 13 bankruptcy. They remind that debtors under this bankruptcy have to repay debts in a three or five year plan. The amount of money you make per month is what will determine whether you are on a three year or a five year plan.
Your first obligation is to file the documents and forms necessary. You must file them with the local bankruptcy court. You need to provide the court with a list of creditors, living expenses, and property. Make sure you check your local law to ensure you have all the documents you need to submit. Another obligation is to pay the fee for filing these papers.
Your final obligation is to repay the creditors. You have to start making your payments in accordance with the proposed plan within 30 days of deciding on it. A bankruptcy trustee holds onto this payment until the court approves or denies your plan. The trustee distributes the money if the court approves the plan. They will return it sans administrative costs if the court denies the plan.
Payments are usually made on a monthly or bimonthly basis. The trustee is usually paid through a payroll deduction, and then distributes the money among creditors. They pay administrative fees, priority debts, secured debts, and unsecured debts. You must pay all debts and administrative fees in full.