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Chapter 13 bankruptcy and payment plans

A Mississippi debtor who successfully files for Chapter 13 bankruptcy will go on a payment plan that lasts for three or five years. Payments are made to a trustee, and the trustee then distributes the payments to creditors.

How much that has to be paid is based on the person's income and expenses. It is necessary to submit expenses for six months. The income can be from a number of sources including employment, alimony or a pension plan. If it varies from month to month, the amount the person must pay can vary as well. For some expenses, such as rent, the filer can use the actual amount owed, but there is a government-set amount that is used for utilities.

Priority debts include things such as child support, taxes and alimony and generally must be paid in full. If a person wants to keep a piece of property, such as a home, the payments have to be caught up with. For unsecured debt, such as medical and credit card bills, the person has to pay as much as the nonexempt assets are worth. However, a person does not necessarily have to pay off all debts. At the end of the payment period, if the person has followed the bankruptcy agreement, many of the remaining unsecured debts will be discharged.

People who are struggling with debt and considering bankruptcy may want to discuss options with an attorney. Some people may hesitate to file for bankruptcy because they think they will be unable to afford the payments or that their credit will be ruined for decades. However, bankruptcy gives a person an opportunity to make a fresh start while avoiding creditor harassment.

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