Filing for bankruptcy often seems like a difficult and even scary task. One of the best ways to help assuage any fears you have is by gaining a deep understanding of bankruptcy. This way, you understand everything that happens as it happens.
One of the first places you can start is by understanding your obligations and duties as a debtor who filed for Chapter 13 bankruptcy.
Prioritizing your debt repayment
The United States Courts lists everything you need to know about Chapter 13 bankruptcy. This includes the obligations you must fulfill. The primary obligation is simple: you must stick to the plan you create. After all, there is no second chance after Chapter 13 bankruptcy. This is your only chance to pay off the debts you owe. This is also why it is crucial to work with a legal expert who can help craft the most optimized bankruptcy plan for you. You want to ensure you can really pay it off.
First, you need to pay off any filing and administrative fees. You need to do this before you even proceed to paying off your debts. Once you get to that part, you will have to prioritize how you pay your debts off. For example, you must pay all priority debts in full first. This includes alimony, wages, child support and commissions owed to employees. Other secured debts like liens follow that.
Then, you pay unsecured creditors. They receive an amount equal to your nonexempt property. Creditors that fall under this category include medical bills, credit card charges and union dues.
Keeping up with secured debt
Remember that you must also keep up with any secured debt that survives bankruptcy. This can include your mortgage, home equity loans and personal loans. You need to keep up with these payments as you continue to pay off your debts. Due to the complexity of juggling so many debts at once, you may benefit from the guidance of a legal expert through the process.