How Much Will My Chapter 13 Payment Be?


How Much Will My Chapter 13 Payment Be?

Your Chapter 13 payment is a combination of a few factors. We discuss these factors in this post. If you have questions please call 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out today.

Priority Debts

There are some debts which must be paid in full during the course of your Chapter 13 bankruptcy. A list is below:

IRS Tax Debt

State Tax Debt

Mortgage Arrears

HOA Arrears

Spousal or Child Support Arrears

Car Arrears

If you owe any of the above items at the time of your Chapter 13 filing, you must pay them through your Chapter 13 plan. If your plan is 60 months, you can divide the totals above by 60 to get your estimated monthly amount applicable to these items. If you do not owe any of the above items, you should discuss Chapter 7 with your bankruptcy attorney.

Ongoing Car and Mortgage Payments

Your mortgage on your primary residence will also be paid through the Chapter 13 plan. This is known as a Conduit Payment because it flows through the Chapter 13 trustee. This is to insure your mortgage creditor is protected in the Chapter 13 plan, ongoing.

Your ongoing vehicle payment will also be built into your Chapter 13 payment plan. In some cases, your interest rate can be lowered in the Chapter 13. Additionally, your vehicle loan balance may be lowered—your attorney can assist with this equation. Lastly, if you surrender your vehicle in Chapter 13, any loan balance above and beyond the blue book value will simply be treated as unsecured debt, discussed below.

Unpaid Attorney Fees

The Chapter 13 fee is set by the court at $4,500.00 plus the filing fee. Your attorney will require some of that to be paid up front. Any remainder will be built into your Chapter 13 plan payment.

Unsecured Debt

Your unsecured debt will typically be paid back at a very low percentage in your Chapter 13. First, you must present a budget to the Chapter 13 court. Then, you must propose that any remaining funds after all of your ongoing monthly expenses, be paid as part of your Chapter 13 payment. This amount varies depending upon your income and expenses, of course. Essentially, the remainder is used to pay the items above, and to pay a small amount to unsecured creditors.

One example of a Chapter 13 plan would be to propose to pay 10% to unsecured creditors. This means if you have $50,000 in unsecured debt (credit cards, medical bills, etc.), you would pay a total of $10,000 to those creditors during the course of the plan. Over  a 60 month plan, this equates to roughly $80 a month.

What Is Your Ability To Pay?

Ultimately, your Chapter 13 payment is a function of your Ability To Pay. In the end, you must show the court that your payment includes the mandatory items above, plus a small amount to your unsecured creditors, and lastly, that it also represents the most you can afford each month.

Changes To Your Chapter 13 Payment

If you income changes (up or down), your Chapter 13 plan payment may also change. This is because the plan payment is based on your ability to pay. As a result, you may be required  to update the court or your attorney periodically, as to your income.

The Trustee Fee

Lastly, remember the trustee receives roughly a 4% fee for every dollar that flows through the plan. If your Chapter 13 plan calculation comes to $1,000 a month, it will need to be increased to roughly $1,040 a month in order to pay the trustee fee.

Speak With A Charlotte Bankruptcy Attorney Today

If you have questions about Chapter 13 and would like to speak with a Charlotte bankruptcy attorney today, call us at 704.749.7747 or click for a FREE CASE EVALUATION. Consultations are free and we’re here to help.