Some Kentucky consumers choose to file Chapter 13 bankruptcy petitions instead of Chapter 7 petitions either because they do not pass the means test or because of the types of debts that they owe. Unlike Chapter 7 bankruptcy, Chapter 13 includes a payment plan that lasts from three to five years. During the repayment plan, the debtors will repay a portion of what they owe to their creditors.
Figuring out how much a person will have to pay during a Chapter 13 bankruptcy plan can be complicated. Many bankruptcy lawyers use computer programs to help with complex calculations. in general, the total amount that will have to be paid will depend on whether the debtor has priority debts, the debtor’s monthly income and expenses, the debtor’s non-exempt assets, and his or her disposable income.
To qualify for Chapter 13 bankruptcy, a debtor must have a regular source of income. The debtor’s allowed expenses will be subtracted from his or her income to calculate his or her disposable income. The total amount of priority debts will be added to the debtor’s disposable income. Priority debts are debts that must be repaid in full during the life of the plan, including child and spousal support arrears, certain types of income tax debt, and others. Finally, the value of non-exempt assets will be added to get the total that will be paid over the life of the plan. The monthly amount can then be found by dividing the total by 60 months.
Chapter 13 bankruptcy cases are more complicated than Chapter 7 petitions. People who want to file for protection under Chapter 13 might want to get help from experienced bankruptcy lawyers. Attorneys might help their clients to propose repayment plans that may be likelier to be approved by the bankruptcy court.