How Does a Chapter 13 Case Work?
First, a bankruptcy petition is filed to open a bankruptcy case. After the petition is filed the debtor needs to file a plan in 14 days. Usually, most people file the plans at the same time as the petition. The plan must include how long you plan to make payments, how much you believe the payment should be, and it must provide for how your debts will be treated.
Which Debts Do You Need to Pay?
You must pay the priority debts in full. These will include taxes, child support and alimony. Additionally, you can either surrender secured debts or pay them in the plan. If you choose to surrender the property, the creditor will be able to take possession of the property. In certain situations, a debtor can pay less than the full amount owed to keep the property.
For home loans, the debtor does not usually have to pay the loan in full. Instead, the debtor can just maintain the ongoing monthly payments while paying the arrears over the term of the plan.
If the mortgage is up to date when the case is filed then it may be possible to pay the debt directly rather than paying it through the trustee.
Besides, you must pay a certain percentage to unsecured debts. This percentage can range from 0% to 100% and is based on several factors. However, majorly it is based on your income and assets.
If you have a high income or low expenses then it is more likely that you will be required to pay a higher percentage to unsecured creditors. Also, if you own a lot of property you might have to pay back more of the unsecured debt.
Many attorneys will file the case without requiring you to pay all of the attorney’s fees upfront. Whatever balance you owe will be paid by the trustee.
Appointing a Trustee
A Chapter 13 trustee is appointed in every Mississippi Chapter 13 bankruptcy case. The trustee is usually a lawyer. And the trustee’s job is to review your paperwork and make sure your plan complies with the bankruptcy laws.
You will make your bankruptcy plan payments to the trustee and the trustee will use that money to pay the debts as outlined below. If the trustee does not agree with a part of your plan, they can file an objection. Common objections include:
- You cannot afford the bankruptcy payment
- You can afford to pay more to unsecured creditors
- You have not provided treatment in the plan for all of your debts
- You have not provided pay stubs, bank statements and tax returns to the trustee for
And if the trustee files an objection, it is up to the bankruptcy judge to decide.
T.C. Rollins is a Jackson, MS bankruptcy lawyer who also has offices in Hattiesburg and Gulfport, Mississippi. If You’re considering bankruptcy in Mississippi, call our office to schedule a consultation with us today.