What Are The Chapter 13 Income Limits?
Generally speaking, there are no income limits in Chapter 13. A Chapter 13 bankruptcy is commonly referred to as a reorganization of your debt. More simply stated, Chapter 13 is an arrangement where you commit some portion of your income to pay your creditors. Provided you honor that commitment for 60 months, the remainder of the debt is discharged.
What Percentage Of My Income Do I Have To Commit?
The answer to this question is different for each individual or married couple entering Chapter 13. While a Chapter 13 plan may ultimately be referred to by the percentage you are paying your creditors, the analysis does not begin there. Your Chapter 13 bankruptcy attorney works with you prior to filing, to determine your monthly net disposable income. If your income (after taxes) is $10,000 per month, and your ongoing expenses each month (not including unsecured debts) are $9,575, then your net disposable income would be roughly $425. This would be the amount the court would require you to commit to your Chapter 13 monthly payment.
If your Chapter 13 plan is 60 months long and you commit $425 a month to unsecured creditors in the plan, you will pay a total of $25,500 to unsecured creditors over the course of 5 years. If you have $100,000 of unsecured debt when you enter the plan, your plan is roughly a 25% plan. This is true because you are proposing to pay roughly 25% of your unsecured debt over 5 years, in exchange for a complete discharge of the remaining 75% of the debt when you finish the plan.
Consider another debtor with the exact same income and monthly expenses, yet that debtor has $200,000 of unsecured debt. That debtor would pay the same $25,500 over 5 years; however, his or her plan would be a 12 or 13% plan, simply because their unsecured debt is greater than that of the debtor in the first example.
Are There Debt Limits In Chapter 13?
Yes, there are debt limits in Chapter 13. As of April 2019, you can have $419,275 in unsecured debt, and $1,257,850 in secured debt at the time of filing. Your bankruptcy attorney will perform a debt analysis with you to determine both the nature of your debt and the amount of your debt.
Speak With A Bankruptcy Attorney Today
Getting started with bankruptcy planning is easy and we are happy to discuss income limits in Chapter 13 and debt limits in Chapter 13 with you. You can call us at 704.749.7747 for a free consultation or click HERE to request a phone call. A lawyer will call you today.