Chapter 13 Calculator
Chapter 13 Payment Calculator
Chapter 13 bankruptcy is a debt-repayment option that spans between three to five years. This page is designed to teach you how to calculate your minimum monthly payment for Chapter 13 bankruptcy. The Chapter 13 calculator does this by considering both secured and priority payments—amounts all debtors are required to pay during this period of time. It’s important to note, however, that some people have to pay more. Having an experienced Louisville bankruptcy lawyer help with your calculations is a must for your Chapter 13 repayment plan. At O’Bryan Law Offices, we don’t want our clients to feel like filing a Chapter 13 bankruptcy is a bad thing. Despite what many people say, filing for bankruptcy is a path to financial freedom. With the help of our knowledgeable attorneys, our clients receive a personalized financial strategy tailored to their situation. To schedule a free consultation with an attorney, call our Louisville office at 502-400-4020 today.
What Is Chapter 13 Bankruptcy?
A Chapter 13 filing is perfect for people who want to protect their homes and other assets. It may also be a better option than Chapter 7 or Chapter 11 if you’re a small business owner. With Chapter 13, you essentially agree to a carefully crafted debt repayment plan. Generally, it involves a partial reduction of an individual’s unsecured debts, reduced debt interest rates, and extended payment terms. Many people appreciate the financial breathing room that Chapter 13 offers. You also keep your home and retirement assets, as well as vehicles and personal belongings in most cases. A Chapter 13 repayment plan helps people, families, and even businesses to restructure their debt. This allows them to pay back creditors either partially or completely. No matter what your reason for Chapter 13 bankruptcy, an experienced Louisville bankruptcy lawyer can help you achieve debt relief.
Filing for Chapter 13
First, ensure that Chapter 13 is the right option for you. Most people choose between Chapter 7 and Chapter 13 to gain control over his or her financial affairs. While both chapters have their own specific advantages and disadvantages, they tend to work better when targeting a specific problem. With the help of a Chapter 13 calculator, you can catch up on loan payments, missed mortgage payments, and even prevent foreclosure or repossession. But it’s important to note that a foreclosure proceeding can still happen if the mortgage company completes the sale before a bankruptcy filing.
Chapter 13 Filing Steps
Below, we outline the specific filing steps we recommend for Chapter 13.
- Analyze the debt. Having too much debt affects your eligibility for Chapter 13. Additionally, debts such as mortgage payments, certain taxes, and child support arrears must receive full repayment over a 3 to 5 year period.
- Value the property. Figure out how much personal property you own, then determine how much you can protect with bankruptcy exemptions. Even though you can technically keep all of your property, your debt management plan will require certain monthly payment amounts to creditors that equal your nonexempt property value. So make sure to factor in the nonexempt property value when calculating your Chapter 13 payments.
- Determine your average monthly income. The most important step is figuring out whether your current monthly income is enough to pay for monthly expenses, debt repayments, and nonexempt assets. Without enough monthly net income, a bankruptcy court won’t allow you to proceed.
- Fill out the required forms. Work with your attorney to ensure that you fill out the appropriate paperwork.
- Take the pre-filing course. This credit counseling course is mandatory. Use the certificate that you receive afterward to file with your bankruptcy paperwork.
- File the official bankruptcy forms and pay the fee. This begins the bankruptcy process.
- Give your trustee the documents which prove your assets and regular income. Then, attend all court hearings.
- Make your payments within 30 days. If a debtor fails to make payments, the court will dismiss their case.
- Get the bankruptcy discharge. This happens after you fully complete your bankruptcy proceeding. The discharge relieves you of payment obligations when you complete your repayment plan.
How to Calculate Chapter 13 Payments With Disposable Income
Disposable income is money you have left to spend after subtracting your allowed bankruptcy expenses. It determines whether you qualify for a bankruptcy discharge in both Chapter 13 and Chapter 7. In claiming deductions, you use the actual payroll deduction cost. For others, however, you use national or local standards.
Below, we list common deductions you may take.
- Food and clothing
- Utilities and housing
- Car loans
- Involuntary payroll deductions
- Life insurance
- Court-ordered payments
- Education costs
- Childcare expenses
- Medical bills
In order to file for Chapter 13 bankruptcy, you’ll need to fill out a form that will help determine your disposable monthly income. The amount of money left over after deducting a debtor’s monthly living expenses is the number that should be paid each month towards their unsecured debts and non-priority debts. This plan typically lasts from 3 to 5 years.
How Much Should You Pay with Unsecured Debt in Chapter 13?
General unsecured debt encompasses all debts other than priority and secured debt. The amount you pay to unsecured creditors is either the greater of your disposable income or the amount they would have received in a Chapter 7 filing. In terms of disposable income, your creditors will receive remaining funds each month after your allowed expenses, secured debts, and priority claims. When it comes to the best interest of the creditors, they receive what they would have in a Chapter 7 filing. In other words, it is an amount equal to a debtor’s property value that’s unprotected by exemptions.
Chapter 13 Applicable Commitment Period
The goal for every bankrupt person or business enduring Chapter 13 is to repay all disposable income through an applicable commitment period. This applicable commitment period depends on the bankrupt person’s average monthly income. This period will only be three years if their income falls under the state median or it will be five years if their income exceeds the state median.
How Can You Reduce Chapter 13 Repayment Plan?
If you wish to lower your monthly minimum payment, you must approach the bankruptcy court.
Debtors may want to lower their monthly payments because they:
- Took a lower-paying job
- Lost key customers or incurring unexpected business expenses
- Suffered a serious personal injury or disability that permanently affects their ability to work
- Paid health insurance premiums for both themselves and their dependents that their employer used to cover
Wanting to lower payments makes a lot of sense when your financial situation changes, especially if you still have “disposable income.” However, lowering these payments requires you to alter your Chapter 13 repayment plan. This is because the monthly payments are an essential part of the plan. In order to modify your Chapter 13 plan, we recommend going back to the calculator. Take into account the priority debts, secured debts, unsecured debts, secured claims, unsecured claims, and feasibility.
Calculating Chapter 13 Payment with New Income
In Chapter 13 repayment, debtors are required to report any changes in income. This is true whether the debtor’s income increases or decreases. Debtors undergoing Chapter 13 bankruptcy must use their “best efforts” to make their plan work. If they see a significant increase in income, they will be asked to increase their monthly payments. A debtor’s failure to report increased income brings the risk of bankruptcy case dismissal, losing their right to a debt discharge, and even punitive bankruptcy fraud charges.
Call a Chapter 13 Bankruptcy Attorney at O’Bryan Law Offices Today