Repayment Plan

Chapter 13 bankruptcy repayment plan outlines the fixed payments which a debtor will pay over a 3 or 5 year period to repay their unsecured and secured creditors. Unless the court allows for an extension, the debtor must submit the repayment plan with the bankruptcy petition within 15 days from the date the petition is filed. Claims which are included in the plan include priority, secured and unsecured debt payments.

Priority debts are paid in full within the repayment plan. Secured debts are can also be included in the repayment plan, but if the debtor fails to complete the repayment plan they may have their secured assets repossessed. Consider, however, a home owner will have the full length of the original loan period to repay the mortgage, although the arrearage must be paid within the term of the repayment plan. If the debt is for a secured claim and the debtor want to keep the asset, the plan must pay the creditor at least the value of the collateral (although if the debt was acquired within a specified time frame the full value of the debt must be paid).

Unsecured debts are also included in the repayment plan, but if the debts are not repaid by the end of the plan, the unsecured debts will be discharged. Within the plan, however, the unsecured creditors should get payment which is equal to the amount they would get if the debtor's assets were liquidated under Chapter 7.