Friday, February 15, 2019

Creating a Chapter 13 Plan You Can Live With

How much should I budget per month to cover my expenses and my repayment plan?

Chapter 13 bankruptcy can provide qualifying debtors with the relief they seek through bankruptcy, will still allowing them to maintain their home, car, and other assets.  Chapter 13 is often referred to as the “reorganization” chapter because it focuses on reorganizing your debts, as opposed to wiping them out, so that they become manageable.  For homeowners and those with assets that exceed the Chapter 7 limits, Chapter 13 can provide the perfect answer.  Chapter 13 files will need to take care when creating their repayment plan so that they develop a plan that they can stick to for several years to come.  Below, our Ohio Chapter 13 bankruptcy lawyers discuss the steps to making a viable Chapter 13 repayment plan.

Consult with a Chapter 13 Bankruptcy Lawyer 

The success of your Chapter 13 bankruptcy will depend in large part on your repayment plan.  Your repayment plan will last a period of between three to five years.  During this time, you will pay a set monthly fee that will cover your bankruptcy debts.  You will want to consult with a Chapter 13 bankruptcy lawyer to assist you through this process.  Your attorney has experience working with lots of Chapter 13 filers and is in the best position to develop a repayment plan that the court will accept and you can successfully complete.

Identify Your Debts 

One of your first steps in creating your repayment plan will be identifying which debts you will need to pay. Priority debts are debts that must be paid first and they include unpaid alimony or child support, state or federal taxes, and sums owed to your employees.  You will also need to decide whether you will keep your home and car.  A Chapter 13 bankruptcy will not wipe out mortgage or car loan debts. You will need to pay the sums owed and then keep up-to-date with your payments to maintain these assets.  You will further need to account for any filing fees, trustee commission fees, and attorney’s fees.

Calculate Your Payments 

With your debts calculated, now you need to calculate your income using pay stubs over the past six months or proof of your self-employment income.  Figure out the length of your repayment plan, which must be at least three years, but could be five depending on your income for a household of your size.  The calculation process is tedious and will also require a look at your exempt assets and payments. Contact a Chapter 13 attorney for an individualized review of your financials and your potential repayment plan.

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