Chapter 13 Bankruptcy: Reorganization and Repayment

Chapter 13 bankruptcy involves a reasonable, court-approved payment plan to pay back part or all of your debt within five years. To be able to qualify for this type of bankruptcy you must have a relatively reliable income. Your income level will be what is used to base your repayment plan.

Monthly Budget

As part of the plan, you will establish a monthly budget that allows for all your necessary monthly expenses like:

• food
• shelter
• transportation
• clothing
• utilities
• health care
• child support, alimony and other needs

Your attorney will give you assistance and advice when filling out this form. This form is very specific with the financial details all written out. The form is based on national standards used by agencies such as the Internal Revenue Service for reporting of income and expenses. Once it is completed, your attorney will file it with the bankruptcy court.

Monthly Disposable Income

The court will review your financial form and use it to establish the amount of your “disposable income.” Your disposable income is the money left over when you deduct your expenses from your income. Typically, you will have to give all of your disposable income to the trustee who will then, in turn, pay your creditors.

Chapter 13 Repayment Plan

The repayment plan must pay the unsecured creditors at least as much as they would have received if you had filed Chapter 7. You also must pay all of your disposable income to the trustee for up to sixty months. Chapter 13 cannot last longer than five years under bankruptcy laws. And creditors can’t contact you during this time as long as you are making the agreed upon payments.

If you need help in understanding the complex bankruptcy laws, please contact a Dallas bankruptcy attorney to answer your questions and discuss what options you may have.