How Much Will My Chapter 13 Payment Be?
One of the most common questions asked, and the most important to many who file Chapter 13 bankruptcy is, “how much will the payment be?” Under the Bankruptcy Code, a debtor must devote his or her projected “disposable income” over the three- or five-year payment plan.
To make this determination, the Court looks to a calculation based on the debtor’s household’s income and expenses.
First, a debtor lists all his or her household’s income, based on all income sources, including:
- Investment income
- Pension income
- Rent, etc.
Next, the debtor lists all his or her reasonable and verifiable expenses. The remaining money is dedicated to the Chapter 13 Plan.
Secured debts under Chapter 13 must be fully paid back. Unsecured creditors should also get some distribution, even if it is minimal.
Consult with our lawyer before walking through Chapter 13 bankruptcy alone. A good lawyer knows how the income and expenses should be stated to ensure the Chapter 13 payment plan is feasible and right for you.
Rockville Chapter 13 Bankruptcy Lawyer
Filing for a Chapter 13 Bankruptcy in Germantown & the Surrounding Areas
If you or a loved one are wondering if a Chapter 13 bankruptcy is right for you, The Diamond Law Group can help. With a commitment to respond within 24 hours, we are dedicated to ensuring you get the representation you deserve.
If you or someone you love is thinking about filing for bankruptcy, reach out to our firm today to learn how we can help by scheduling a free, no-obligation consultation. Call us at (301) 417-5855 or contact us online.
What Is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy allows you to declare bankruptcy and follow a Court made repayment plan over a period of three to five years without having to liquidate your assets.
This stops collection attempts and creditor harassment while consolidating your debts into one trust. The repayment of these debts is administered by a Court selected trustee.
This allows individuals with income to both retain their property and repay their debts. Such a plan can provide a structured way to put you back on track to financial stability.
When Should You Consider Chapter 13 Bankruptcy?
You should consider a Chapter 13 bankruptcy if:
- Your unsecured debt is less than $394,725.00.
- Your secured debt is less than $1,184,200.00.
- You have a regular income or salary.
How a Chapter 13 Bankruptcy Works
You must file for a Chapter 13 bankruptcy and provide the Court with all the information about your assets and liabilities.
The Court then constructs a repayment plan tailored for you in which debts are prioritized and paid off over three to five years. After completing the plan, you are absolved of liability and can once again chase your dreams of a debt free future.
Can You Get Rid of a Second Mortgage by Filing for Bankruptcy?
An advantage of Chapter 13 is that it allows people with two mortgages to eliminate their second mortgage through a Chapter 13 filing. This process, also known as “lien stripping” or “lien avoidance,” can be done when the value of the property is less than the value of the first mortgage.
The logic is simple. Usually when people file a Chapter 13 bankruptcy, they must repay 100% of their secured debts while unsecured creditors may not be getting 100% of their debt paid. When the case is over, any debt owed to an unsecured creditor is discharged.
Even though mortgages are secured debts, Chapter 13 allows some individuals to get rid of their second mortgage by filing a Motion with the Court asking to “avoid” the second mortgage by making it an “unsecured” debt under an equity theory.
Understand all your options available before filing for bankruptcy. Nobody wants to file a bankruptcy, but if you do file, our Rockville Chapter 13 attorney can ensure that the bankruptcy is tailored for your future success.
We want to see you succeed in your case and are committed to doing our best work to make this happen.
Our proven results and extensive experience will help generate a favorable outcome.
We aim to be your closest confidant and promise not to make any judgments, ever.
Our policy is to return all correspondence within a 24 hour period - you'll never be left in the dark.