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What are the requirements of a Chapter 13 repayment plan?

South Carolina individuals who file for bankruptcy relief pursuant to Chapter 13 must submit a repayment plan to the court. While the plan is often filed at the same time as the petition, with an exception for situations in which an extension is granted by the court, it must be filed no later than 14 days after the filing of the petition.

A Chapter 13 plan must provide for regular payments to the bankruptcy trustee, whose duty it is to distribute funds to the creditors who have filed claims. The plan must account for three different types of creditor claims: secured, unsecured and priority. Secured claims arise from debts for which the creditor holds an interest in collateral. The plan must provide for a secured creditor to receive the value of the underlying collateral, at least, if the debtor desires to keep it.

Unsecured creditors need not be paid back as long as they receive at least what they would have in a Chapter 7 proceeding and the plan distributes all of the debtor's disposable income. In most cases, priority claims must be paid. These are claims that arise from debts to which the bankruptcy laws grant special treatment. Examples of priority claims are those associated with tax debts and the costs of the bankruptcy itself.

The term of the plan varies between three and five years depending on the income of the debtor. The specific requirements of a Chapter 13 repayment plan vary based on the facts of the particular case. Those who have questions about creating or filing a plan may want to speak to an attorney who can assist with the development of a repayment plan that meets the Chapter 13 requirements and represent the petitioner during meetings of creditors

Source: United States Courts, "CHAPTER 13", October 27, 2014

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