Chapter 13 bankruptcies are three to five years with a monthly payment plan where you restructure your debt. Depending on your case during a chapter 13 you may hear the following terms or phrases.
- Best Interest Test: The best interest test is the amount that needs to be paid to your unsecured creditors over the life of the bankruptcy plan. This test is determined by preferences, transfers, and non-exempt assets.
- Pay in Full Bankruptcy: A pay in full bankruptcy, generally means you are paying your unsecured creditors in full. This can be for a variety of reasons, but the most common are, you have a high best interest test or you have enough disposable income to pay your creditors in full over the bankruptcy.
- Bonus Language: Generally, bonus language means adding in a sentence to your bankruptcy plan that states you will turn over the net value of any bonuses received during the life of the plan.
- Unemployment Language: If you or your spouse become unemployed during the chapter 13 bankruptcy, you may add unemployment language to your plan. Generally, this will say when you or your spouse has employment you will let the trustee know and amend your income and expenses schedules.
- Federal Judgment Interest Rate: In some chapter 13 bankruptcy cases interest will need to be paid. If your case needs interest to unsecured creditors, the interest rate is determined by the federal judgment rate.
- Motion for Relief: A Motion for Relief is typically filed by creditors who want to take your collateral/debt out of the realm of the bankruptcy automatic stay. Usually this is done if payments are not made or you want to surrender an asset.
- Motion for Dismissal: A Motion to Dismiss can be brought by various parties, typically the trustee in your case will bring it if requested information is not provided or payments fall behind. If a Motion to Dismiss is ordered, your chapter 13 case will be dismissed.
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The above are some of the various terms and phrases used in a chapter 13 bankruptcy. If you have other questions about chapter 13 visit www.lifebacklaw.com to speak with an attorney. You will be glad you did!