Living with debt can feel overwhelming and endless. One may feel like he or she will never find financial relief, but filing for bankruptcy could be the answer. Chapter 13 bankruptcy is centered on a repayment plan that, overtime, seeks to repay creditors as fully as possible. However, many individuals who successfully pursue Chapter 13 have a significant number of debts discharged once their repayment plans are completed. While this is great for a debtor, it can be terrible for creditors. As a result, they often have an interest in the terms of a debtors repayment plan. To ensure that the process and the bankruptcy plan is fair, it must be confirmed by a court of law.
Before the court will confirm a bankruptcy plan, though, it must consider a number of factors. Obviously, the plan has to conform to bankruptcy laws, but it must also be made in good faith and the petitioner must show that he or she is capable of making all payments under the terms of the plan. Special consideration must also be given to creditors with secured claims. These are usually debts that are backed by collateral. Generally speaking, a bankruptcy plan will only be approved if a secured creditor approves of the plan or the debtor releases the asset to the creditor. The plan may also be approved with regard to secured creditors if liens are in place.
Unsecured creditors can, and often do, object to the confirmation of a bankruptcy plan. This is because their debts are usually the ones that are written off after the payment plan is completed. Although a court should deny confirmation of a bankruptcy plan upon one of these objections, it can still approve the plan if the value of the property in question is greater than the creditor’s claim or that a petitioner’s disposal income under the plan will be applied to the unsecured debt.
The focus of a Chapter 13 bankruptcy is the bankruptcy repayment plan. It can be a highly contentious issue, but one that can be appropriately handled by a skilled attorney. Chapter 13 bankruptcy isn’t right for everyone, though, which is why Chapter 7 bankruptcy should also be a consideration made by Texans who are struggling with personal debt. To learn more about these debt relief options, those facing overwhelming financial challenges should reach out to an attorney they can trust.