Before you agree to a repayment plan for a chapter 13, you should know how to figure the debt repayment amount in a chapter 13 so that you know which secured debts you will be paying on first and how the remaining unsecured debts are paid, if at all. The repayment plan can go as long as one year to five years until the discharge date, but you do have to have the finances in order to have a chapter 13 repayment plan. Learn how the repayment is figured and what is considered.
List all of your debts. Start with the secured debts first and list the unsecured debts last. Secured debts would be anything that a creditor could take away if you don't pay it, such as a car or house. Unsecured debts would unsecured credit cards, medical bills and any unsecured loans.
Write the amount you owe on each debt. For secured debts, you write how much you are behind in payments, any interest and penalties if any you owe. For unsecured debts, you write the total of the debt that you are behind on and the total of the debt to pay in full. The unsecured debts will have two amounts to determine a repayment plan.
Calculate the secured debts that you must repay to keep your property. Calculate the unsecured debts for behind payments and the amount of total debt. Repayment plans look at secured debts first and then unsecured debts second when deciding on how many years you will have a repayment plan and how much you need to pay a month after your income is calculated.
Calculate your monthly income. Include all wages and any cash you receive every month such as alimony or child support.
Subtract all of your living expenses allowed from your monthly income. You can look at the sample form (See Reference) to calculate your living expenses.
Take the total amount of secured debts and divide by twelve months, twenty-four months, thirty-six months and forty-eight months. This will give you an estimate of how much your repayment would be monthly for a chapter 13 repayment plan for the amount of time of the plan. If you have this amount left over or more after you calculated your monthly budget versus your income, you may qualify for a chapter 13. Unsecured debts are calculated after the secured debts and sometimes the amount paid can be as low as a penny on a dollar or nothing at all. This all depends on how much money you have left after the secured debts and a monthly fee for the trustee.
- This is by no means set in stone. This is for an estimated repayment plan only. A lawyer or trustees are the only ones that can tell you the exact payments after all paperwork is completed. However, this will give you an idea before you spend money on a bankruptcy attorney.