How much will my monthly payments be under Chapter 13 reorganization?

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Question

If I get into a chapter 13 bankruptcy payment plan, how do I know what my monthly payment will be? How is it calculated?

Answer

Here's how to get a general idea of how much your Chapter 13 plan payments will be.

1. Determine which debts must be paid in full. Add up the following debts and divide by the number of months your plan will last.

  • Priority debts. These include most federal and state back taxes and back child support you owe to an ex-spouse or child.
  • Arrearages on property you want to keep. These include mortgage and car loan arrears.

2. Add up your monthly payments on secured property you want to keep. If you want to keep your home or car, you'll have to keep current on your mortgage and car loan payments. Sometimes you pay these through the plan. Other times you pay the lender directly. The same goes for other secured property. Add these monthly figues to your monthly payment for priority debts and arrearages. 

3. Figure out how much you'll have to pay towards your unsecured debts. You'll have to pay somewhere between 0 and 100% of your unsecured, nonpriority debts.  

(1) The minimum amount you must pay is equal to the amount your unsecured creditors would have received had you filed for Chapter 7 bankruptcy.

(2) You must devote all of your disposable income to your repayment plan, even if this means your unsecured creditors will getmore than if you had filed for Chapter 7. To learn more about what constitutes your disposable income, see Chapter 13 Bankruptcy Laws: Your Disposable Income.

Once you determine how much you will pay towards unsecured debts each month, add this to your previous monthly calculations.

4. Figure out how long your plan will last. Your plan will last three or five years, depending on your current monthly income. 

To learn more about calculating your Chapter 13 payments, see How to Calculate a Chapter 13 Monthly Payment.

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