How Much Will My Chapter 13 Payments Be?

Determining how much your Chapter 13 payments will be is a complicated process which involves several components. Your bankrutpcy attorney will gather numerous pieces of information from you in order to accurately propose a Chapter 13 plan to the court. If approved, your Chapter 13 payment will be set by an Order confirming the plan.

Your Payment Starts With Your Ability To Pay

Chapter 13 is distinguishable from Chapter 7 in that when you file Chapter 13 you are being asked to pay something back to your creditors over a 3 or 5 year period. If your current monthly income is greater than the applicable state median, you will have a 5 year plan. Most plans are 5 years. The burning question is HOW MUCH do I have to pay to my creditors?

One premise of Chapter 13 is that the debtor must pay to creditors whatever amount they are able to pay. More specifically, after the debtor takes their monthly income and subtracts all ongoing monthly expenses, the remainder is known as Net Disposable Income. This is the amount you should commit to creditors in your Chapter 13 plan. Your bankruptcy attorney will work with you to make sure you’ve taken all allowable expenses and deductions against income. This serves to lower the Net Disposable Income and in turn lowers the portion of your Chapter 13 payment going to unsecured creditors.

Items Which May Increase Your Chapter 13 Payment

Once you have calculated your Net Disposable Income, you have determined the floor or the lowest amount you can propose to repay to creditors. However, you must also consider assets and certain other priority debts, in order to complete the analysis. A debtor is only allowed a certain dollar amount of equity in particular assets (Home, Vehicle, etc.). If the debtor’s equity exceeds the allowable amount, then the debtor must propose a plan which accounts for that amount. The allowable amount of equity in property is excluded from the bankruptcy estate by claiming your bankruptcy exemptions.

Example: Debtor owns a home worth $200,000.00. Debtor’s mortgage balance at the time of filing is $160,000.00. Debtor has $40,000.00 of equity. The allowable Homestead Exemption in North Carolina is $35,000.00. In this case, the debtor exceeds the allowable exemption by $5,000.00. As a result, the debtor must propose a plan that pays at least that amount to unsecured creditors, spread out over the 5 year plan period. $5,000.00/60 months = $83/mo. If the debtor’s Net Disposable Income is already $83/mo or higher, no adjustments need to be made. However, if Net Disposable Income is only $53/mo, the debtor would have to increase it to $83/mo.

In this instance, the ‘floor’ set by Net Disposable Income may need to be raised to accommodate the excess equity in the home. Below is an example where debtor has a priority debt which must be paid in full. This can also affect the minimum monthly plan payment. Priority debts include but are not limited to: back child support owed, IRS debt less than 3 years old, NC Department of Revenue debt less than 3 years old, back property taxes owed, HOA dues owed at the time of filing.) The answer to the question “How much will my chapter 13 payments be” changes, depending upon the factors below.

Example: Example: Debtor has Net Disposable Income of $100/mo. However, debtor also owes the IRS $5,000 from taxes less than 3 years old at the time of filing. As such, those taxes are priority debt and must be paid in full over the life of the plan. For a 5 year plan, the monthly payment on the IRS debt would come to roughly $83/mo. As the debtor already has Net Disposable Income exceeding $83/mo, the plan is fine at $100/mo. The bankrutpcy trustee will send roughly $83/mo to the IRS and the remaining $17/mo to the unsecured creditors.

In a situation where the debtor has BOTH excess equity in property AND priority debt, you must apply both rules. The minimum monthly payment proposed must be enough to pay a) the excess equity over 5 years, AND in addition, must include enough money to pay the priority debt.

Example: Combining both examples above, the debtor has $5,000 in excess equity and an additional $5,000 in priority debt. As such, the plan must pay a total of $10,000 over the 5 year period. $10,000/60 months = $166/mo. As a result, no matter the Net Disposable Income of debtor, it would be inappropriate to propose a monthly plan payment less than $166/mo.

Other Factors Which Affect A Chapter 13 Plan Calculation

Vehicle Loan Balance–Typically, the balance on your vehicle loan will be scheduled to be paid evenly over the 60 month plan period. If you only have 2 years remaining on your vehicle when you file Chapter 13, this will result in a decrease in your car payment (spreading it out over 5 years instead of 2) which will help to absorb some of the potential increases discussed above.

Age Of Vehicle Loan–If your vehicle loan is older than 910 days at the time of filing, you can reduce the balance of the loan down to the Fair Market Value of the vehicle, and pay that entire balance over the 60 month plan period. This often results in a substantial “win” for the debtor and can make a Chapter 13 plan feasible.

Remaining Attorney Payments–The Western District of North Carolina sets the base fee for attorneys in Chapter 13 at $4,500 as of the writing of this article. If you pay your attorney $4,500 prior to filing, you will not have any attorney payments built into your payment. However, this is not an option for most clients. Supposing instead you pay $3,500 to your attorney prior to filing, this would leave $1,000 to be paid throughout the 60 month plan period.

Speak With A Personal Injury Lawyer Today

If you would like to speak with an attorney about your personal injury case, we’re here to help. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article was helpful, you may find other helpful articles on our Personal Injury Blog. Thank you for visiting the website—we hope it has been helpful.

Charlotte Bankruptcy Attorney Reviews

Charlotte bankruptcy attorney reviews should be an important part of your decision to hire a bankruptcy lawyer. Often, reviews are less specific as to the results the bankruptcy attorney achieved, and more specific as to the experience the individual had with the law office. This will help you make a decision between two attorneys or law firms which you think would be good choices for you.

Can I Rely On Charlotte Bankruptcy Attorney Reviews?

Generally speaking, you should be able to rely on attorney reviews on Google. Google has a trustworthy process for making sure reviews are genuine, and not just “made up” by the company trying to sell itself. You may also want to check facebook.com to see if the Charlotte bankruptcy attorney reviews on Facebook are similar to those on Google.

What If A Charlotte Bankruptcy Attorney Has A Bad Review?

Studies have shown that a law firm or business is actually more trustworthy if they have one or two bad reviews. In other words, you might be suspicious if the bankruptcy law firm had nothing but perfect reviews. It makes sense that after years of practicing bankruptcy, a law firm might have a few bad reviews from unhappy clients—unfortunately it’s just a part of life for any business trying to serve the public.

Attorney Comments On Reviews

One thing you might look for in a bad review is whether the company or lawyer responded to the poor review. If they did respond, was their response one of regret that the person had a bad experience? Did the business blame the individual for the poor experience or outcome? The company’s response is a good way to judge how the company interacts with its clients or patrons.

Speak With A Charlotte Bankruptcy Attorney Today

Once you’ve read a law firm’s website to see if their material is relevant, and checked out their reviews, we recommend you call the firm. You should be able to speak with the bankruptcy attorney on the phone—not just a staff person. If the attorney is not available, you should expect a call back within 24 hours unless there are circumstances preventing it. If it takes a bankruptcy lawyer three days to return your call, you might predict that it will be tough to get your calls returned and your concerns addressed if you choose to work with that bankruptcy lawyer.

Request A Consultation

If you’d like to speak with a Charlotte bankruptcy attorney, give us a call. Part of our job is answering questions. We are happy to analyze your bankruptcy case, whether you end up filing with us or with another firm. What’s most important is that you find the right attorney for YOU. If we can help, we would love to. If we think another Charlotte bankruptcy attorney is a better fit, we can certainly recommend a few to you. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will be in touch shortly.

How Fast Can I File Chapter 7 Bankruptcy?

How fast you can file Chapter 7 bankruptcy depends a lot on how quickly you can provide information to your Chapter 7 bankruptcy attorney. In some instances, you can file an emergency Chapter 7 bankruptcy, which puts the Automatic Stay into effect while you and your Chapter 7 bankruptcy attorney continue to gather necessary information for the remainder of your filing. Click for a FREE CASE EVALUATION and we’ll call you today.

Reasons To File Chapter 7 Quickly

Wage Garnishment—If you’re facing a wage garnishment, filing a Chapter 7 bankruptcy will put a halt to the wage garnishment. Whether this will be a permanent solution or not depends on the type of debt which gave rise to the garnishment. If the debt will be discharged in bankruptcy, you should not experience the garnishment again. If the debt will not be discharged in bankruptcy (Spousal support, some IRS debt, etc.) then the garnishment may start again after your Chapter 7 closes out, or after the creditor applies for and receives Relief From Stay.

To Prevent Foreclosure—If you have a pending foreclosure, filing a Chapter 7 bankruptcy will halt the foreclosure process. Keep in mind, this may only be a temporary delay in the foreclosure process. Unless you’re able to get current with the mortgage lender quickly after filing, the lender will probably appeal to the court for Relief From Stay, in order to once again pursue their foreclosure. Even if the foreclosure does move forward, you may be entitled to some proceeds from the foreclosure under the Homestead Exemption in Chapter 7 bankruptcy.

To Prevent Repossession—If your vehicle is about to be repossessed, filing a Chapter 7 will freeze the vehicle lender in their pursuit to repossess. You’ll need to be ready to get current on your loan before your 341 meeting (40 days after filing), or expect the repossession efforts to continue at that time. You’ll also be given a chance to surrender the vehicle, if you want to get rid of the car and the heavy debt associated with it.

To Stop A Lawsuit—Filing a Chapter 7 will put the court on notice that you have filed and the Automatic Stay in bankruptcy is in effect. This serves to stop judicial proceedings against you. Depending upon the type of debt which gave rise to the lawsuit, there is a good chance our Chapter 7 will eliminate the debt and the lawsuit with it. In that case, the creditor will no longer have any rights against you.

Requirements To File Chapter 7 Quickly

Our firm can generally work as quickly as you would like, to file a Chapter 7 bankruptcy. The answer to “How fast can I file Chapter 7” is often: how fast can you do or provide the following:

Take the required online Credit Counseling course

Provide six months history of income

Provide two years of tax returns

Provide a current monthly budget of income and expenses

Provide limited other necessary information required to file

Pay Your Attorney Fee

Further Reading

You can read more articles on our Bankruptcy Blog Articles page, or click one of the recent articles below:

How Long Will My Bankruptcy Take?

Can I File Bankruptcy And Keep My Car?

Speak With A Chapter 7 Bankruptcy Attorney Today

Find out how fast you can file a Chapter 7 by calling us today at 704.749.7747 or by clicking for a FREE CASE EVALUATION. We will reach out to you within 24 hours to discuss your reason for filing, and to put a plan together to fight your creditors by using the powerful resource of a Chapter 7 bankruptcy filing. When it comes to choosing a law firm, we know you have options. We hope you choose to Recover With Us.

How Much Does Chapter 13 Cost?

In the Western District of North Carolina, the court sets the attorney base-fee at $4,500.00. However, you do not owe all of those funds prior to filing. You and your bankruptcy attorney will agree upon an amount you will pay prior to filing; the remainder will be built into your Chapter 13 plan, and paid over the course of your Chapter 13 case. There are also court filing fees, but again, those can typically be paid over time as part of your Chapter 13 plan payment.

What Determines My Chapter 13 Plan Payment?

Your Chapter 13 plan payment is a combination of both your ability to pay, and a comparison to what your creditors would receive if your assets were liquidated in a Chapter 7 bankruptcy filing. Additionally, if you have mortgage arrears (missed payments) or vehicle lender arrears, those will need to be paid over time in your Chapter 13.

Ability To Pay In Chapter 13

Your ability to pay is simply a look at your ongoing monthly income and expenses. Your bankruptcy attorney will propose a payment to the court. This proposed payment will be examined. Essentially, any leftover funds each month after your ongoing household expenses are paid, should be your minimum monthly Chapter 13 payment.

Arrears And Other Priority Debt

If you have mortgage arrears, as mentioned above, those will need to be built into your Chapter 13 plan payment. Additionally, if you have IRS or state tax debt which is less than three years old, that will need to be re-paid in the plan. Your attorney will calculate your payment on these items, in addition to a small percentage to be paid to your unsecured creditors. These calculations will be compared to your budget, or your “Ability to pay” as discussed above. If your budget supports the proposed monthly payment, your plan should be approved by the court.

Length Of Your Chapter 13 Plan

Most Chapter 13 plans are five years or 60 months. If you want to propose a shorter plan, you will typically be required to pay the same amount but over the shorter period of time. In many cases, if you propose a plan shorter than five years, it must be a 100% plan. This means that your plan proposes to pay your unsecured creditors 100% over the course of the Plan. A typical five year plan will pay somewhere between 1% and 15% to the unsecured creditors, depending upon the factors mentioned in this article.

Speak With A Bankruptcy Attorney Today

The easiest way to get a better idea of what your Chapter 13 plan payment would be is to speak with a Charlotte bankruptcy attorney today. You can call us at 704.749.7747 or click for a FREE CASE EVALUATION. After a brief discussion with an attorney, and after submitting some documentation, we will be able to estimate a Chapter 13 plan payment for you. We can also confirm if a Chapter 7 or a Chapter 13 is the best choice for you.

Chapter 11 Bankruptcy In NC

A Chapter 11 bankruptcy is a way to reorganize your business debt while continuing to do business. Chapter 11 enables you to continue your livelihood without the constant threat of creditors to sue you, shut down your business, or otherwise disrupt you from being profitable.

When you file Chapter 11 bankruptcy, you and your bankruptcy attorney are proposing a plan to your existing creditors. Depending upon the profitability and assets of the ongoing business concern, your plan will propose to pay a percentage of your debt to creditors over time.

The Cost of Chapter 11 Bankruptcy

The court charges a filing fee of roughly $1,200.00, together with an administrative fee of $550.00. There are ongoing quarterly fees which must be paid to the court as well. Your attorney fees related to Chapter 11 bankruptcy are hourly. While your bankruptcy attorney will need to evaluate your case before estimating the attorney fees, it is a safe assumption your Chapter 11 bankruptcy will cost somewhere between $10,000.00 – $15,000.00. We know this is a substantial amount of money. Whether to file Chapter 11 will depend upon whether the cost of doing so is outweighed by the benefit to you and your business. Your bankruptcy attorney should help you sort through those questions as you gather information about the business together.

Do My Creditors Have To Accept My Chapter 11 Plan?

No, your creditors do not have to accept your Chapter 11 plan. However, if the plan is reasonable given the income, assets, and overall financials of the business, your bankruptcy attorney will argue on your behalf that the plan should be accepted. Generally, your Chapter 11 plan is a five year plan; however, you can propose a shorter plan if the shorter plan pays all creditors in full over the course of the plan. Generally, you must commit all of the business’s disposable income over the five year period to the plan. The calculation of disposable income is an equation involving income and expenses. If income and expenses change significantly during the plan, your Chapter 11 plan may need to be re-evaluated. In this regard, the Chapter 11 bankruptcy is reflective of your ability to pay, both at the time of filing and ongoing during the life of the plan.

Chapter 11 For Corporations vs. LLCs or Partnerships

A Chapter 11 bankruptcy for a corporation will only consider the assets of the corporation. To the extent the individual filing bankruptcy owns stock of the corporation, the stock assets must be considered in the assets calculations filed with the court.

A Chapter 11 bankruptcy for a partnership, LLC or sole proprietorship, is distinguishable from a Chapter 11 for a corporation or “C-corp”. In this filing, the individual and the business are treated as one for bankruptcy. The result is that all personal assets must be disclosed and considered when proposing the overall plan to pay back creditors over time in Chapter 11.

Chapter 11 vs. Personal Bankruptcy

In many cases, it is preferable to file a personal bankruptcy—Chapter 7 or Chapter 13—in lieu of filing a Chapter 11. The cost of filing is considerably lower, and the complexity of the case is different as well. If your company has few assets, you may be able to accomplish your goals by dissolving the company. This will relieve the company’s obligation under company debt. To the extent there is a personal obligation attached to the company debt, a Chapter 7 or Chapter 13 would serve to discharge the individual from that debt.

Speak With A Charlotte Bankruptcy Attorney

The next step is to speak with a Charlotte Bankruptcy attorney. Consultations and case evaluations can be done over the phone or in person. You’ll come away with a much deeper understanding of your options. This alone provides peace of mind. If you decide to move forward with a bankruptcy filing, we can discuss next steps and take action together immediately. Call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out to you. We know you have options. We hope you choose to Recover With Us.

Generally, speaking you cannot use your credit card to pay for bankruptcy. The reason behind this is if you use your credit cards too close to filing bankruptcy, there is a presumption of abuse that arises. This presumption of abuse means it is assumed that you incurred debt you knew would be forgiven or discharged by Chapter 7 bankruptcy. By using your credit card to pay for bankruptcy, then filing bankruptcy, it is hard to argue you did not plan to have the cost of bankruptcy discharged. Keep in mind, you cannot keep your credit cards when you file bankruptcy.

Incurring Debt Prior To Bankruptcy

Your lawyer can’t advise you to incur debt prior to filing bankruptcy. If your lawyer accepted a credit card payment for your bankruptcy, this would be the equivalent of advising you or assisting you in incurring debt prior to filing bankruptcy. This violates federal bankruptcy law and your lawyer would experience repercussions as a result. There are a few exceptions, like accepting a credit card payment from a relative for your bankruptcy; however, attorneys have to be very careful when accepting credit card payments in any situation.

Allowable Debt Prior To Filing Bankruptcy

This does not mean you can’t incur any debt prior to bankruptcy. An example would be the purchase of a car before filing bankruptcy. If you take out a loan to buy a car just before bankruptcy, this is allowable. First, a vehicle loan is a secured debt. This means that the lender is secured in the event you file bankruptcy—if you want the debt discharged you would have to give them the vehicle. However, in most cases, when you buy a car before filing bankruptcy, it’s to avoid trying to buy one after bankruptcy hits your credit score and credit report. In that case, after you file the bankruptcy, you simply file a reaffirmation agreement with your attorney’s help. This way, you file bankruptcy, keep the car, and keep the debt associated with the car. The loan terms do not change.

Cash Advances And Bankruptcy Filing Fees

You can potentially take out a cash advance on a credit card to pay your attorney. However, in our opinion, this still qualifies as using your credit card to pay for bankruptcy. Additionally, if you take out more than $925 in the 70 days prior to filing bankruptcy, for any reason, the credit card company can file a lawsuit demanding that those particular funds should not be discharged in bankruptcy.

How Can I Pay My Bankruptcy Fees

Stop Paying Credit Cards — Once you know you’re going to file bankruptcy; you can stop making payments on credit cards which will be discharged in bankruptcy. This may free up some immediate cash flow to pay for your bankruptcy.

Borrow Money From A Friend Or Family Member – It’s ok to borrow money from a friend or family member to file bankruptcy.

Ask About A Payment Plan With Your Attorney – Our firm allows payment plans for filing bankruptcy. Your final payment does need to be made prior to filing the bankruptcy. This allows you to make a small payment up front to hire us, and have us work on your case. Together we will spend as much time as needed preparing for the filing. When you’re ready with your final payment, we will also be ready to file the bankruptcy. This works great for most clients.

Talk To A Charlotte Bankruptcy Attorney Today

If you’re having trouble with finances, and considering bankruptcy, give us a call. You can reach us at 704.749.7747. Or you can click for a FREE BANKRUPTCY CONSULTATION and we’ll call you shortly. A brief phone conversation can change your life and get things going in the right direction. We know you have options. We hope you choose to Recover With Us.