Chapter 13 bankruptcy offers hope to individuals and couples who are experiencing financial problems that they cannot resolve. Many people are struggling to keep their families in their homes, keep a car to get back and forth to work and pay their living expenses. They fell behind on their bills for various reasons and just cannot seem to get caught up. If their creditors would only let them pay a little each month or pay a percentage of the debt they owe, they could make it work. A Chapter 13 plan payment does just that.
What is a Chapter 13 Plan?
A Chapter 13 bankruptcy is also called a reorganization. This type of bankruptcy case allows the debtor to propose a plan that outlines how the debtor will reorganize his or her debts. The plan allows the debtor to catch up on past due mortgage payments, repay a car loan under better terms, repay taxes over 60 months and pay only a percentage of the debtor’s unsecured debts.
Depending on the debtor’s income and debts, the bankruptcy plan will typically propose monthly payments for 36 to 60 months. Once the debtor pays all of the payments under the bankruptcy plan, the debtor will receive a discharge for the remaining balance on eligible unsecured debts. The discharge prevents a creditor from attempting to collect the remaining balance on a discharged debt. The debtor now has a clean slate to rebuild his or her finances.
How Is The Chapter 13 Plan Payment Calculated?
There are several factors used to calculate a Chapter 13 plan payment. For this reason, it is always best to consult with an experienced bankruptcy attorney if you believe you need to file a bankruptcy case. An experienced bankruptcy lawyer understands how to calculate a plan payment that proposes the lowest monthly payment acceptable to the court.
The first factor to take into consideration will be your disposable income. The Bankruptcy Code requires a debtor to use his disposable income to repay his creditors through the bankruptcy plan. Your disposable income is calculated by deducting allowed living expenses and deductions from your gross income. However, this may or may not be your plan payment as there are other factors to consider.
Secured debts such as mortgage arrearage and car payments are typically paid in full through the bankruptcy plan. Priority unsecured debts, such as tax debts and administrative expenses, must also be paid in full through your plan. In addition to these debts, we must also take into consideration any non-exempt assets. If you have non-exempt equity in any assets, this could increase your plan payment slightly. This may sound like a very high amount; however, you must remember that these amounts will be spread out over a 60-month plan. Furthermore, you may not be required to pay all of your unsecured creditors in full.
Experience Matters When Calculating A Plan Payment
Calculating a plan payment can be very complex. I understand how to use the tools provided under the Bankruptcy Code to calculate the lowest plan payment acceptable by the court. This gives you the best chance of making your plan payments to achieve your goal of receiving a bankruptcy discharge.
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable Payment Plans
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm focused on Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, debt consolidation, credit repair, tax liens, student loans and foreclosure. We represent clients in Burlington County and throughout South Jersey.
Contact our office at 609-267-5297 to schedule your free consultation to discuss bankruptcy and non-bankruptcy alternatives. You may also use our convenient online contact form and one of our friendly, professional staff members will contact you to answer your bankruptcy questions and/or schedule a free consultation with Travis J. Richards.
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