Who gets paid through my Chapter 13 bankruptcy plan? What is the 13-B Bankruptcy plan?
One form of bankruptcy that is often pursued by people is called a “Chapter 13”. A Chapter 13 bankruptcy is fundamentally a three- to five-year plan in which you make payments to the bankruptcy trustee, who is federally appointed to oversee your bankruptcy. The idea is that these payments will typically pay down a portion of what you owe, and then at the end of your chapter 13 plan you will receive a bankruptcy discharge which will eliminate any remaining obligation that you have towards the debts being resolved through the bankruptcy.
In contemplating the possibility of a Chapter 13 filing you might naturally wonder where these payments being made through the plan are going, and who the recipient of the funds will ultimately be. To begin with, funds paid under the Chapter 13 plan will be paid directly to trustee’s offices. The trustee is responsible for disbursing the funds to all parties who are eligible.
The specific recipients of funds will vary depending on the case, but a few entities are almost always included. The first is any unsecured creditors you may have at the time you file. This includes any lenders of credit cards, personal loan or unsecured lines credit that you may have, as well any entity to which you owe a bill for utilities, medical care, or professional services. The court will notify these creditors when the bankruptcy is filed. They will then be invited to submit a claim to the trustee, which will allow them to receive payment from the funds paid into the bankruptcy. Your attorney will also be paid from the funds paid into the Chapter 13 Plan. The law firm that you are working with will file a claim with the trustee, and they will generally be paid their legal fees directly by the trustee!
Other parties eligible for payment through the plan include the IRS, state taxing authorities and any secured lender that an arrearage might be owed to for something like a home mortgage or a car loan. The parties that are paid through the plan vary depending on the case. This is because the amount of arrearages or back taxes owed will be different. You can also pay off your motor vehicle through Chapter 13 bankruptcy. So, if you want to pay the remaining balance of your car, your car lender will be paid as well. It allows us to settle our unsecured debts for pennies on a dollar while protecting us from creditors throughout the life of the plan. Call Now for a Free Strategy Session with a MN Bankruptcy Lawyer at LIFEBACK LAW FIRMS
Our firm is experienced in creating Chapter 13 Plans and we are experts at structuring them so that all parties are paid while minimizing the out of pocket expense. So, when the time is right, or when you are ready, please don’t hesitate to reach out to Minnesota’s most kind and helpful bankruptcy law firm by going now to
www.lifebacklaw.com
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