What Will Your Chapter 13 Bankruptcy Payment Be?
Unlike a Chapter 7 bankruptcy, Chapter 13 will require that you make some payments to your creditors, over the course of 3-5 years. This may initially seem like a bad idea, but there are a lot of advantages to a Chapter 13 that a Chapter 7 bankruptcy may not have.
But before considering which chapter bankruptcy you want to file—assuming you have the option to file either one—your first question may be “what will my payments be in a Chapter 13 case?”
Of course, that will vary on a case by case basis, and the payment will be different depending on your unique circumstances. However, these are some factors that will dictate what your Chapter 13 bankruptcy payment will be.
Priority or Non-Dischargeable Debts
Any debts that are not dischargeable, must still be paid off over the course of the plan—however, you don’t need to pay all of these debts off during the 3-5 year plan. You will only have to either make your regular payment on these debts, or your regular payment plus paying off any amount that is late or which you are behind on.
Unlike other debts, with priority debts, at the end of your plan, whatever you still owe will continue to be valid, and you will continue to owe the money as you would have had you never filed for bankruptcy.
What you owe for secured debts will depend on whether you want to keep the property; if you want to surrender the property that is secured, you won’t have to pay much at all-and possibly, you may pay nothing. If you do want to keep the property, you will have to make the regular payments, plus paying off any amount that you are behind on payments.
With regard to your home, this means that unlike with Chapter 7, in Chapter 13, there is an automatic payment plan allowing you to keep your property, make payments, and come out of the bankruptcy current on your mortgage.
Unsecured debt generally doesn’t have to be paid off in a Chapter 13—but that’s not always the case. If, after paying the debts listed above, you still have disposable income, the remainder of your disposable income must go to paying creditors.
Your Chapter 13 payment may also go up and towards your unsecured creditors, if you have non-exempt property that you want to keep; in that case, you may have to include the value of the property you are keeping in your payment amount-you are essentially “buying back” your own property, allowing you to keep it.
What is your disposable income? That depends; the law has a formula to determine what expenses you have are considered mandatory, and which are considered not mandatory, thus giving you disposable income. Often, there are arguments about disposable income; the less you have, the better it may be for you, because it means that’s less money you have to pay to unsecured creditors.
Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today to see if CHapter 13 bankruptcy is right for you.