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How do I get a Chapter 13 plan approved?

Many Massachusetts residents who are struggling with debt may find themselves a little apprehensive if they are told that, because of their income, they will have to file a Chapter 13 bankruptcy. Compared with Chapter 7 bankruptcies, Chapter 13 proceedings are not as common among Massachusetts households, and the way its process works is not as ingrained into the cultural parlance.

Basically, a Chapter 13 debtor will keep most of his or her property but will, in exchange, have to submit a proposed repayment plan to the bankruptcy court for approval. When determining whether to approve a payment plan, the court will look to a variety of factors spelled out in bankruptcy law.

Basically, the idea is that the debtor will apply all of his or her "disposable income" to the repayment of debts. If the debtor's plan proposes as much, it stands a good chance of being approved, even if the debtor is not planning to pay back all of his or her debts in full. Of course, the court will also double check to make sure that the debtor can in fact afford to make regular monthly payments for three to five years.

The issue that many Massachusetts debtors face involves what constitutes "disposable income." In many cases, disposable income is determined by a set formula. While a debtor would have the right to argue what numbers should be plugged in to the formula, a debtor otherwise has only limited legal room in which to argue the special facts and circumstances of his or her case.

In any event, though, getting one's Chapter 13 plan approved is a crucial step in the process. Without an acceptable repayment plan in hand, the bankruptcy will not give a debtor the discharge that he or she needs to make a fresh financial start free of burdensome debts. For this reason, a person contemplating a Chapter 13 bankruptcy should consider speaking with an experienced Massachusetts bankruptcy attorney.

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