Chapter 13 payment plans cause a lot of anxiety to people considering bankruptcy. While it’s impossible to give you a specific number until we look at the facts of your case, we can give you some guidelines to help you figure out what your plan payment might look like.

Here’s how your Chapter 13 payment plan will be determined.

How Much Debt Do You Have?

The amount of debt you carry will be one of the biggest determinants of your plan payment. 

1. Priority debts must be paid in full. These include your last three years of federal and state taxes, back spousal and child support, personal injury or wrongful death awards from DIs, and fraud-related court judgments.
2. Secured debts arrearages are paid in full, and then you must make your monthly payments to stay current. 
3. Unsecured debts may be paid at 0% to 100% depending on your monthly disposable income. 

Suppose you have $40,000 in priority debts. You’d divide the amount by 60 to get a 5-year payment amount of $666. Of course, some people have no priority debts at all. Their payment would be considerably lower. 

Now, suppose you have an arrearage of $3000, as well as a house payment of $900 and a car payment of $300. The arrearage adds another $50 a month to your plan. Your monthly payments are tacked on straight. Your total Chapter 13 payment plan could be $1916, which of course, includes your mortgage and house payment. If you have no more disposable income, you might not have to pay your unsecured debts at all.

How Much Income Do You Have

You have to make enough income to pay for the plan. The courts will look at the value of the property you would have lost in Chapter 7, that is, all the assets you can’t protect with bankruptcy exemptions, as well as the amount your plan would pay to unsecured creditors. If the amount is the same or more than what your creditors would have received in Chapter 7, you’ll be able to get a Chapter 13.

Suppose you have no unexempt property whatsoever. In that case, you’re in good shape even if you pay 0% to your unsecured creditors because you don’t have any additional disposable income. If you have no disposable income to pay unsecured creditors and you have $10,000 in non-exempt property, then the courts may require you to declare Chapter 7 instead. 

Your disposable income is any income over what it takes to pay your plan, pay for your rent, utilities, food, car insurance, and repairs, and pay for pet expenses, health care expenses, and clothes. They’ll use National and Local standards for necessary expenses and out-of-pocket health care expenses. For example, your monthly allowance for a single person for food, housekeeping supplies, apparel, personal care products and services, and “miscellaneous” is $723. Allowable transportation expenses are $355 for one car in New York. You’re allowed just $68 for health care expenses. 

Get Help Today

Chapter 13 calculations can be complex, and it can be difficult to understand what these numbers will look like in your specific case. Our office will be happy to help you understand what the courts will see as your disposable income and what your payment plan is likely to look like.

Contact us to schedule a free consultation today.

See also:

3 Debts You Can Discharge in Chapter 13 That Can’t Be Discharged in Chapter 7

How to Prepare for Bankruptcy

What Happens if You Can’t Meet the Terms of a Chapter 13 Repayment Plan