Monthly Payments For Chapter 13 Bankruptcy
Debtors who are struggling to make payments may find
Chapter 13 bankruptcy helpful for a number of reasons. For some, it helps them make their money
stretch further while still being in good standing with their creditors.
For others it helps them keep their property due to falling behind on
payments. You get legal protection while making payments you can afford
based on your income ability with court approval. So, how are monthly
payments determined after you file?
Whether you are looking to
prevent foreclosure or
repossession, you can use Chapter 13 to help you maintain affordable monthly payments.
Each month, the debtor submits their payment to their trustee, who then
distributes the payment to your creditors. Depending on the amount you
owe, it can be divided up into a 3 to 5 year installment repayment plan.
In determining the actual amount of your payment, there are several factors
that are reviewed by the court:
- Household expenses and your monthly income.
- Outstanding priority debts (debts you must repay such as child or spousal
support and tax debt).
- Outstanding balances of secured debt (items you wish to keep such as your
vehicle or house). This may focus on default payments and bringing the
account to current status.
- Value of non-exempt property.
Once these aspects have been reviewed the court will approve your monthly
payment amount. As long as you make your payments each month according
to your repayment schedule, you can keep your property while being on
the road to become debt-free.