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Chapter 13 Bankruptcy: How Much Will You Pay Each Month?

Posted By Allmand Law Firm, PLLC || 25-Jul-2013

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.


Categories: Chapter 13 Bankruptcy
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