Maryland consumers who have trouble paying their debts might want to consider filing for Chapter 13 bankruptcy. This type of bankruptcy involves paying back debts over time, so it’s important to properly prepare for your repayment plan.
What to know about Chapter 13 bankruptcy
People who have debts that they are having difficulty paying off due to time constraints often turn to Chapter 13 bankruptcy. Chapter 13 bankruptcy works by giving a debtor a period of three to five years to pay back their creditors. They are able to do this through a repayment plan that they prepare and that is approved by the bankruptcy court. Debts that can be discharged in Chapter 13 include credit card debt, personal loan debt, and medical bills.
How does a Chapter 13 repayment plan work?
With a Chapter 13 bankruptcy repayment plan, you are given up to five years to repay the debts owed to your creditors. This means you’ll need enough income to be able to make regular monthly payments on things like your rent, utilities, and other routine bills. Some debts are required to be paid in full such as alimony, child support, and taxes.
Chapter 13 bankruptcy doesn’t require any of your property to be sold to pay off creditors. However, you’re required to pay assets that aren’t exempt. If you own property that would have been sold through Chapter 7 bankruptcy, it must be paid for with Chapter 13.
You’re responsible for paying back priority debts like taxes and court-ordered obligations and secured debts. This might include a car loan or mortgage. Meanwhile, your unsecured debts might end up discharged by the time you’re at the end of your Chapter 13 bankruptcy repayment plan. These debts are considered the lowest priority.
Chapter 13 bankruptcy might be the best option for you to repay your debts. It gives you the chance to pay what you owe over time, so it’s worth learning more about.