During your Chapter 13 bankruptcy, you will submit a payment plan to the court that determines how much money you will pay to creditors each month. This plan will last from three to five years, after which the court will discharge most of your debts.
One question that many clients ask is: How much will I need to pay? Like with most legal questions, the answer is: It depends.
There are many factors that will determine how much money you will need to pay each month during your Chapter 13 bankruptcy. For example, your bankruptcy plan must take into account:
- How many payments you have missed: Let's say your home is nearing foreclosure and you filed bankruptcy to stop foreclosure. You are behind on your house payments by $12,000. If you want to keep your house, you will likely arrange to pay back your mortgage arrears over a five-year period. This means you may pay up to $200 a month.
- Your projected disposable income: This income, which does not include reasonable and necessary expenses, will be used to determine how much you can pay each month of your Chapter 13 bankruptcy plan.
- Your priority debts: Priority debts take precedence in bankruptcy proceedings. For example, if you owe taxes, government penalties or a domestic support obligation (child support and/or spousal support), then you must pay those debts back through your bankruptcy plan.
- Bankruptcy court costs: You will also include these costs (such as the price of the bankruptcy trustee) in your Chapter 13 bankruptcy plan.
- Your non-exempt assets: While you can keep your assets during a Chapter 13 bankruptcy, you may need to cover their value through the bankruptcy plan. Your plan must be at least the value of all of your nonexempt property.
As you can see, determining how much money you will owe each month can involve multiple variables. An experienced bankruptcy lawyer can help you work with your creditors and draft a reasonable Chapter 13 bankruptcy plan.