How much will I pay each month under my Chapter 13 repayment plan?

Chapter 13 bankruptcy, commonly referred to as the “reorganization chapter,” allows individuals with a more substantial income to file for bankruptcy in order to repay their debts.  Chapter 13 bankruptcy has the advantage of allowing filers to keep their home and car, while still paying off their debts over a period of three to five years.  One of the first concerns of many potential Chapter 13 filers is how much they will pay monthly during the repayment period.  Our Xenia, Ohio Chapter 13 bankruptcy lawyers provide an overview as to how you can calculate your repayment costs below.

Priority and Secured Debts

To calculate the amount you will need to pay under your Chapter 13 repayment plan, you will want to start by determining which debts the court will require you to repay.  In a Chapter 13 action, you will need to repay all priority debts.  These debts include any federal or state back taxes or unpaid child support.  Next determine what you currently owe on the property you want to come, which could include your mortgage or car note.

In addition to repaying what you owe on the property you will keep, you will also need to stay current with your mortgage and car payments.  At times, these costs will be included in your repayment plan.  Other times, you will pay the creditor directly.

Unsecured Debts

Along with your priority and secured debts, you will be required to repay a portion of your unsecured debts in your Chapter 13 repayment plan.  The amount you owe varies widely depending on your individual debt and income factors.  You must repay at a minimum an amount equal to what you would have repaid had you filed for Chapter 7 bankruptcy.  This amount will be calculated, in part, based on how much of your property is exempt.

You will further be required to put all of your disposable income towards repayment of your unsecured debts.  Your bankruptcy attorney will help you to calculate your disposable income, which is determined by subtracting your “allowable expenses,” like rent and medical expenses, from your total income.  

To determine your monthly repayment plan costs, add together your priority debts, secured debts, and unsecured debts, then divide this number over the length of your repayment plan.  For individuals with an income lower than their state’s median income, your plan will generally be three years, while higher income earners will usually be five years.  Your attorney will help you with these complex calculations so that you have a solid idea of what amount you will owe monthly under your Chapter 13 repayment plan.