Minnesota residents who decide that bankruptcy is right for them may be able to file for Chapter 13 bankruptcy. This type of bankruptcy allows you to create a repayment plan that you can present to the bankruptcy judge for approval. There are many different types of debts that a Chapter 13 repayment plan will work for.
Three main types of debts
There are three main categories that Chapter 13 bankruptcy debts fall into. These include priority debts, secured debts and unsecured debts. Priority debts are debts that must be paid off during the replacement plan. Some common examples include back taxes, bankruptcy filing fees and spousal support. The second type is secured debts, which are backed by a form of collateral. Some common examples include your home mortgage or auto loan. The last category is unsecured debts, which are the lowest priority for repayment during a Chapter 13 bankruptcy. Some common examples include credit card debt and unsecured personal loans.
Crafting a repayment plan
It’s best to work with a bankruptcy lawyer to help formulate a repayment plan for your debts. This replacement plan is to be structured over three to five years and will cover taking care of all of your outstanding debts. In cases where it’s determined that making regular payments over the three- to five-year time period is unable to pay off all of your debts, the bankruptcy judge may authorize a discharge of some of those debts. The most likely debts to be discharged are unsecured debts.
Filing for Chapter 13 bankruptcy can be a long process that involves many calculations to determine a feasible repayment plan. For this reason, it’s advisable to seek the assistance of a lawyer to help throughout the process. They may help ensure that all your debts are accounted for in your repayment plan or that they get discharged by the bankruptcy judge.