The New Mexico Chapter 13 Plan is a bankruptcy repayment plan that allows individuals to reorganize their debts and establish a payment plan with their creditors. This type of bankruptcy is also known as a wage earner's plan and is used by individuals who have a regular income but are facing financial difficulties. Under this type of plan, individuals must make regular payments to their creditors over a period of three to five years. The New Mexico Chapter 13 Plan typically requires debtors to pay off their debts according to a court-ordered repayment plan. Creditors are paid on a priority basis, with secured creditors such as mortgage and car loan lenders receiving the highest priority. Unsecured creditors such as credit card companies and medical bills receive the lowest priority. The repayment plan is designed to ensure that all creditors receive some payment, and that the debtor can remain current on their debts. Once the repayment plan is approved by the court, it must be followed for the duration of the plan. If the debtor fails to make the required payments, the court may dismiss the case and the debtors may be required to liquidate their assets in order to pay their creditors. There are two types of New Mexico Chapter 13 Plans: traditional and modified. A traditional Chapter 13 Plan requires the debtors to pay back all of their creditors according to the repayment plan approved by the court. With a modified plan, debtors may be able to reduce the amount of debt they must repay and/or extend the length of the repayment plan.
New Mexico Chapter 13 Plan
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FAQ
In Chapter 13 bankruptcy, you must devote all of your "disposable income" to the repayment of your debts over the life of your Chapter 13 plan. Your disposable income first goes to your secured and priority creditors. Your unsecured creditors share any remaining amount.
Chapter 13 can be useful for people with serious debts who worry about losing their homes to bankruptcy. If you adhere to your repayment plan, you'll have a new lease on financial life. Unsecured debts will be gone, but mortgages and car payments might linger.
A Chapter 13 bankruptcy can remain on your credit report for up to 10 years, and you will lose all your credit cards. Bankruptcy also makes it nearly impossible to get a mortgage if you don't already have one.
Chapter 13 Has a Failure Rate of 67% Why do roughly 2 out of every 3 Chapter 13 cases fail? Well, to get a discharge of your debts, you need to complete a 3-5 year repayment plan. And most plans are 5 years long. Only at the end of the plan will the remainder of some debts be forgiven.
You don't have to pay unsecured debts in full. Instead, you pay all your disposable income toward the debt during your three-year or five-year repayment plan. The unsecured creditors must receive as much as they would have if you'd filed Chapter 7.
To calculate the total average monthly payment, add all amounts that are contractually due to each secured creditor in the 60 months after you file for bankruptcy. Then divide by 60.
The discharge releases the debtor from all debts provided for by the plan or disallowed (under section 502), with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.
The Chapter 13 Plan must: provide for payments of fixed amounts to the trustee on a regular basis, typically monthly. provide for the full payment of all claims entitled to priority under section 507 such as taxes and child support (unless the holder of a particular claim agrees to different treatment of a claim)