The chapter 13 bankruptcy plan is the center-piece of a chapter 13 bankruptcy case. The plan determines how all of your creditors will be treated in the bankruptcy and how much you have to pay. The plan will typically have several sections. This post is to give you an overview of the chapter 13 plan used for bankruptcy in North Georgia including the Newnan area. A copy of the plan can be found here.
The first section in the standard bankruptcy plan for the Northern District of Georgia (which includes Coweta and the surrounding counties) is a simple statement that the debtor will submit the required amount of money to the bankruptcy trustee.
Section two determines the length of the plan (the commitment period) and the amount of the debtor’s monthly payment into the plan. The plans typically last from 36 to 60 months. If your income is less than average for your household size in the state of Georgia, then you can do a 36 month plan. If your income is greater than the average for your household size, then you will have to do a 60 month plan.
Also, there are situations where you might qualify for a 36 month plan, but need to make a plan go longer to afford the payments. In those situations, we can often extend a plan up to about 54 months.
Section three sets forth the rule that the proof of claim filed by the creditor will determine the amount of a creditor’s claim, unless the debtor objections to the claim. Sometimes creditors do not file the proper claim and your Newnan lawyer will need to objection to the claim to keep it from causing a problem with the plan.
Section four determines how attorney fees will be paid. It is important to understand that your attorney will be paid a large portion of the fee out of the money you pay into the plan prior to the plan confirmation. Any amount still owing after the lump sum, will be paid monthly based on the amount in this paragraph.
Section five determines how priority claims will be paid. Priority claims are paid before any other debts. They are typically taxes and domestic support obligations (child support and alimony). It is critical that you make certain all of your priority debts are listed and addressed in your plan.
Section six addresses secured claims – secured claims are typically loans for houses and cars, but can be loans for furniture and other household items. You are required to say in your plan what you intend to do with these loans and items associated with them. For instance you may surrender a home or car as a part of your plan. You might also need to catch up payments on a house or car which is allowed as a part of a chapter 13 bankruptcy plan. The provisions for making this happen would be a part of section six.
Section seven addresses your general unsecured creditors. These are typically credit cards and unsecured loans. In the Newnan and Atlanta area plans, your plan will list a total amount of money percentage that should be paid back to your unsecured creditors. The amount can be from 1% to 100% of what you owe and is determined by the amount of money you pay into the plan over the life of the plan.
Section 8 determines whether you will handle unexpired leases – for instance, you may reject a car lease in order to improve your financial situation in a chapter 13 bankruptcy case.
Section 9 discusses property of the bankruptcy estate in a chapter 13 case – this section means that any property you are not able to exempt, is technically under the authority of the bankruptcy trustee until your case is either complete or dismissed for any reason.
Section 10 is a catch all for any other claims or debts not covered in the prior 9 sections.