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Making a Chapter 13 plan work

Chapter 13 bankruptcy involves an individual making payments to creditors through a trustee pursuant to a court-approved plan. These payments may be made either directly to the trustee or through deductions from a Florida worker’s paycheck. Payroll deductions may be more convenient for all parties, and it may increase the chances of making timely payments and completing the plan.

During the repayment period, debtors are entitled to keep and use his or her property. However, they may not incur new debt without permission to do so. A trustee may deny the request of a debtor to incur new debt as it may compromise the ability of that person to make payments under the bankruptcy plan. If an individual is unable to make payments as agreed, a judge may convert a Chapter 13 filing to a Chapter 7 filing, which may mean some assets are liquidated.

A case may also be dismissed if an individual fails to make child support payments during the repayment period. Furthermore, all required tax filings must be made during this time. Throughout the repayment period, the debtor and all creditors are bound together until the discharge occurs, and a judge generally has to approve of any plan brought forth by a debtor seeking protection.

Individuals who are looking for a fresh financial start may wish to consider filing for bankruptcy protection. It may put a stop to creditor harassment while a debtor figures out a way to repay or discharge some or all of the debts. Those who own a home may be able to catch up with back mortgage payments before a lender forecloses on the property. There are several eligibility requirements under Chapter 13 that a lawyer can outline.

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