Oregon consumers who are considering filing for Chapter 13 bankruptcy might wonder what is involved in the repayment process. To file for Chapter 13 bankruptcy, it is necessary to go through the means test, which is income-based, and may have assets they want to keep. This might include the house. A Chapter 13 bankruptcy involves paying off debts over three or five years. Working with an attorney, the debtor creates a repayment plan that is then submitted to the bankruptcy trustee for approval. Many unsecured debts that remain at the end of the repayment period are discharged except for those that are not eligible. Among these are child support payments.
In general, the priorities are considered to be debts such as back taxes, alimony and child support. Secured debts, such as mortgages, come after this. Finally, there are unsecured debts. This includes medical and credit card debt.
There are some potential disadvantages to a Chapter 13 bankruptcy. A person’s disposable income must go toward repayments although the person is allowed to keep enough income to cover living expenses. If the person cannot keep up with the payments, the plan might have to be renegotiated.
However, there are also a number of advantages to a bankruptcy filing. All creditor actions, including foreclosure, must stop when a person files for bankruptcy. Filing for Chapter 13 bankruptcy is also a way that a person can start over financially. Over time, the person can start rebuilding credit, and this might actually be a faster way of reestablishing good credit than spending years struggling with unmanageable debt. People who are struggling with debt might want to discuss their options, including bankruptcy, with an attorney.