Chapter 13 Bankruptcy and Calculation Of Your Payment Plan
In the course of filing for Chapter 13 bankruptcy, you are responsible for proposing a repayment plan that will pay your creditors all or some of your debts back over the course of a minimum of 3 or up to a 5-year period. Unless you’re paying back all of your debts in a shorter period of time, your payment plan must be at least 36 months or 3 years long. However, it cannot exceed 60 months.
Income That Is Below The State Median
If your income falls below the state’s median your plan can typically be anywhere from 36 to 60 months long. Taking the 60-moth payment option could reduce your monthly payment by stretching them over a longer period of time. Certain debts have to be paid back in full under your repayment plan. Talking to your lawyer at the outset of your case is strongly recommended if you believe that a Chapter 13 bankruptcy is in your best interests.
For The Best Payment Plan, Do You Research
This means that you carefully need to research these well in advance to identify a plan that pays off all of those debts within 60 months. Certain obligations like priority debts must be paid and cannot be discharged in bankruptcies. Some of these include taxes, back child support, and alimony. You have to pay off these debts in full through your repayment plan if you file for Chapter 13. Talk to your attorney first to learn more.
If you have nonexempt assets or disposable income, you will also have to pay back a portion of your non-priority unsecured debts like medical bills and credit cards.
Current Income Vs Disposable Income
Your Chapter 13 approval and repayment plan will require you to complete a current monthly income and calculation commitment period and disposable income. This is the means test for Chapter 13 and will help to determine how long your plan will last and how much you will need to pay non-priority unsecured creditors as a result of your bankruptcy. Chapter 13 bankruptcy mandates that you need to pay your non-priority, unsecured creditors as much as they would have received had you moved forward with a Chapter 7 bankruptcy. Proposing and calculating the right Chapter 13 repayment plan can be a complex process. Consulting with the right bankruptcy lawyer can assist you.