Definition - What does Repayment Plan mean?
A repayment plan is a plan set forth in a bankruptcy proceeding that outlines how much money a person in a Chapter 13 or Chapter 11 bankruptcy will pay to each individual creditor. The amount is actually paid to the bankruptcy Trustee each month. The Trustee then distributes the money to the creditors.
There is no definite division of assets within a bankruptcy. Not all creditors are paid and many creditors do not receive the full repayment of the owed debt. Repayment plans are based on the income and the expenses of the debtor.
Justipedia explains Repayment Plan
The debtor will make payments according to the repayment schedule to the appointed Trustee. In cases where there are assets, the Trustee may liquidate the assets in order to pay some or all of the debts. This reduces the amount that is due under the repayment schedule.
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