Chapter 13 bankruptcy is the branch that requires a person to repay the debt they owe, and people often choose this branch if they do not qualify for Chapter 7 or if they would benefit more from this chapter. If you are considering using Chapter 13, you will have a repayment plan you must use for the next three to five years, and here are the top factors that will affect the amount you must pay for this plan.
The amount of money you make will not only affect the repayment plan amount you must pay, but it will also affect the length of your repayment plan. The first thing a lawyer will do is compare your income to the state's average, which is often called the median income. If you earn an amount that is less than this amount in your state, you can get by with a three-year repayment plan. If, however, your income exceeds this amount, you will most likely have a five-year plan.
The other vital factor used to determine your payment plan amount is the debts you have. You will have to create a list of every debt you have, and your lawyer will categorize your debts as priority debts or non-priority debts. Priority debts are the types of debts you must fully repay, while there is a chance you will not have to repay all of your non-priority debts.
Priority debts will include back taxes you owe and child support. Priority debts also typically include your mortgage payment, including arrears you owe, and any types of loan payments you have. Non-priority debts will include credit card payments and other types of unsecured debts.
When your lawyer creates your plan, it will include paying off all the priority debts for sure. If you have enough income, it will also include paying off the non-priority debts. Your repayment plan will allow you to keep a certain amount of your paychecks for regular expenses you must pay for to live, but the rest will go for repaying your debts. In other words, you should have enough money left each month to pay for groceries, gas, entertainment, and other essential things you need to live.
To find out exactly how much your payments would be if you filed for Chapter 13, you will need to visit a lawyer. When you visit, bring your financial information with so the lawyer can fully evaluate your entire situation. For more information, contact a company like Lifeline Legal LLP.