When you file for a Chapter 13 bankruptcy, you agree to draft a repayment plan which you will use to repay your creditors. Many times debtors are required to file their original repayment plan with the Chapter 13 bankruptcy filing, but other courthouses will allow a debtor to file the plan within 15 days after the petition is filed. The plan must be submitted for court approval and must provide for payments of fixed amounts to the trustee on a regular basis. Sometimes the payments will be biweekly, whereas other plans will include monthly installments. The payments are normally large sums which are given to a trustee. The trustee then takes these finances and distributes them to creditors.

There are three types of claims which can be used under the Chapter 13 bankruptcy plan. The first are priority claims. These are claims that are granted by special status by the bankruptcy law. Some priority expenses include taxes and the actual cost of the bankruptcy process. After priority claims come secured claims. These are expenses that are secured by property or collateral. For example, a mortgage is a secured claim because the bank has the right to take your home if you fail to pay. A car loan is also a secured claim. Lastly, there are unsecured claims. These are debts which are often discharge because the creditor normally doesn't have any special rights to collect against a property owner.

When you create a repayment plan, you will want to make sure to list your three tiers of debt and organize the repayment so that it hits each of these requirements in succession. It is important to start by tackling all priority debts then covering all secured debts. Any unsecured debts that are not discharged will be repaid after other debts are covered. Secured debts must be paid up to the value of the secured item unless the debtor would rather relinquish a hold on the collateral.

For example, if a debtor decides he would rather release a hold on his car and eliminate the debt, this is his choice. If he decides to keep the car, he will need to make regular car payments that at least cover the value of the car. In some cases, the creditor may require that the debt is paid in dull, instead of only requiring the value of the collateral. In most Chapter 13 bankruptcies, creditors are willing to extend the time that a loan is due in order to help the debtor out. For example, if your last mortgage installment was supposed to be paid in six months, but you have organized a two-year plan, then you may be able to get the two-year plan worked out so that your mortgage provider will allow you this extra time.

When it comes to unsecured claims, most debtors can eliminate these expenses through discharge. Unsecured creditors are only entitled to the amount of restitution that they would receive if the debtor's assets were liquidated under a chapter 7. In a chapter 13 bankruptcy, "disposable income" is income that amounts to excess of what than the debtor needs to maintain a reasonably comfortable lifestyle.

For example, a woman who has a house payment, needs to pay for food, needs to cover the costs of a car payment, and needs to pay off student loans and child custody will need to pay all of these expenses before arriving at a disposable income. This is the extra money which will be funneled into a Chapter 13 bankruptcy to pay off debts. If you want more information about repayment plans, or need help organizing one of these plants, you need to talk to a local bankruptcy attorney immediately.