How Much Do You Need to Pay in Chapter 13 Bankruptcy?
1. Secured debts in arrears (such as delinquent mortgage dues): If you wish to reinstate your mortgage (to spare your home from foreclosure), the chapter 13 bankruptcy payment will incorporate the sum required to repay the arrears (without added interest) over 36- to 60-months;
2. Secured debts that are current (like auto loans): vehicle loans can be paid outside the chapter 13 bankruptcy plan (directly to the lender); however inclusion in the chapter 13 bankruptcy payment-plan can allow auto-loan payoff at reduced principal and/or stretch the loan terms (up to 60 months) to lower monthly dues;
3. Priority debts: these are debts that aren’t dischargeable, such as recent taxes; they have to be paid in full (over the course of up to 60 months) in the chapter 13 bankruptcy; and
4. Unsecured debts: the chapter 13 plan designates a percentage paid to unsecured creditors ((like Amex, Discover and other friends). The percentage may be as low as 0% and whatever it is, the balance of the debt is forgiven (with the exception of certain unsecured debts like student loans). The percentage the plan pays to unsecured creditors will be the highest of the following three measures:
i. Your actual disposable income (meaning your net income less your actual (reasonable and necessary) living expenses;
ii. Your “theoretical” disposable income, which is a function of your income less standardized living expenses (IRS- and Census-derived allowances designed to reflect reasonable living costs); or
iii. The hypothetical sum creditors would be paid if you were to alternatively file Chapter 7 Bankruptcy IF it were the rare chapter 7 bankruptcy in which some property would be sold to pay proceeds to creditors. Property could be sold in chapter 7 bankruptcy if its value doesn’t fit within bankruptcy exemption allowances, which seldom happens.
Confusing? You betcha. But your San Diego Bankruptcy Attorney is your guide through the chapter 13 bankruptcy land of confusion. Our work boils down to this:
Chapter 13 bankruptcy affords tremendous benefit. It’s your San Diego Bankruptcy Attorney’s job to enhance your NET benefit: meaning, we get you the lowest possible chapter 13 bankruptcy plan-payment. This is why we aim… low, in this bankruptcy Game of Loans.
Your San Diego bankruptcy attorney proposes a monthly chapter 13 plan payment (by our own calculation). Once your chapter 13 bankruptcy case is filed, you must commence making monthly payments in the proposed amount. Payments are directed to a Chapter 13 Bankruptcy Trustee who distributes the funds among your creditors.
The bankruptcy attorney is your passionate advocate clearing the minefield of debts. In chapter 13 bankruptcy, the ball is in our court.
Now, your San Diego bankruptcy lawyer wants you to pay less each month. The chapter bankruptcy 13 bankruptcy trustee wants more. (Where would the fun be if we all agreed?) Sometimes creditors want more too. Your San Diego Bankruptcy Attorney is your faithful advocate who ensures you pay no more than what the above-numbered parameters prescribe.
Hashing out the payment amount with opposing parties (i.e. obtaining bankruptcy court confirmation, which cements the sum of the monthly payment) may take many moons. Through this process, the chapter 13 bankruptcy client will tender timely payments to the chapter 13 trustee and… she’ll simply chill, ’cause her bankruptcy attorney will take on the rest (with the client’s occasional input). In the end, your San Diego bankruptcy attorney will confirm a chapter 13 payment carefully crafted to be as fair and affordable as possible.
Chapter 13 bankruptcies routinely fail across the industry. Our chapter 13 bankruptcy confirmation rate is nearly 100%.