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Do I still have to repay my debt in Chapter 13 bankruptcy?

No one in Florida goes into debt with the intention of taking on more than they can handle, but the future is unpredictable. Jobs do not last forever, medical emergencies can drain savings accounts and emergencies can take both a financial and emotional toll on debtors. Chapter 13 bankruptcy provides a path of partial debt repayment that also creates the opportunity for better financial footing.

Unlike Chapter 7 bankruptcy -- which liquidates a person's assets to repay debts -- Chapter 13 repays creditors using a debtor's income. As such, only individuals with sufficient and regular income qualify for this type of bankruptcy. The income requirement is essential to the repayment plan, which is the main feature of Chapter 13 filings.

Repayment plans do not deal in broad strokes, and individuals must provide as much detail as possible when submitting their plans to the court for approval. These details include exactly how much will be repaid and to which creditors, the length of the plan and repayment plans for secured debts, which cannot be discharged. Some bankruptcy courts offer guided forms for filers to fill out, but there is no standard repayment plan that every person must follow. The repayment plan must be realistic based on a person's income, or it will not be approved.

Income also determines the repayment plan's length. A higher than average monthly income will lead to a five-year plan, while a lower income indicates a three-year plan. At the end of a repayment plan any remaining debt is discharged under Chapter 13 bankruptcy, allowing people in Florida to start a fresh financial page.

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Paul Urich
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Law Office of Paul L. Urich, P.A.
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