How Chapter 13 Bankruptcy Payments are Determined

Chapter 13 bankruptcy payments are determined based on a number of factors including income of the debtor, amount of debt, number of creditors and assets of the debtor. Other financial facts may also be considered in coming to a reorganization plan for a Chapter 13 filer.

The Plan

Chapter 13 bankruptcy involves a repayment plan in which the debtors debts are rolled into one plan for repayment at a lesser rate than the overall original debt. This can be a fraction of the debt originally owed depending on the facts of the case. The debtor proposes a plan to the court and the court will take into consideration several factors in determining whether the plan is appropriate. Factors considered by the court will include:

• Interests of creditors - the court will only approve a plan that gives the unsecured creditors at least as much as they would have received had you filed for Chapter 7.
• Priority claims must be paid in full, usually tax and support payments
• The debtor must make a best effort to pay back creditors what is in their financial means. This is determined by looking at the debtor's disposable income.

Can Creditors Object?

While creditors can object to your proposed plan, they do not have the same opportunity to do so as they would in a Chapter 11 filing. They can only object if the proposed plan does not meet the above considerations.

After Filing Chapter 13

The debtor will continue to carry some of his debts after filing for Chapter 13. This might be the best type of bankruptcy if you have assets that you wish to protect. You will have some responsibilities to complete the process since your bankruptcy dissolution is final until you pay your last planned payment. You will need to:

• Make plan payments on time every month until the end of your plan period.
• Refrain from getting into any extensive new debt unless you obtain court or trustee approval in advance.
• Maintain insurance on any assets that are being used to secure any of the plan debt.

Getting Legal Help

If you are facing Chapter 13 bankruptcy, an attorney will help you figure out the best way to deal with your financial matters. An attorney will file your paperwork, deal with your creditors, advise you of your rights and options and stand by you as you attend your meeting of creditors.