How Many Payments in Chapter 13 Bankruptcy

For a Chapter 13 bankruptcy, you keep all of your possessions and make arrear payments to the court. These back payments can last anywhere from 36 to 60 months, depending on the amount you owe and your income. To be able to file Chapter 13, you must have a steady source of income to make the payments.

One of the questions most people have when they file Chapter 13 bankruptcy is how long they will have to make the payments. If your income is less than your state’s median, you can submit a plan for three years or less. The court can propose a plan that lasts up to five years if it takes you that long to pay off your priority debt. If your income is more than your state’s median income, you will submit a plan for five years to make your repayments.

Disposable Income

First, you will determine your base income, calculate your average gross income over the last six months before filing bankruptcy minus child-support payments, disability payments, or foster care payments you receive for a dependent child. Next, you will subtract your reasonable expenses from the base pay, the money you have leftover will be considered your disposable income. Your disposable income is what you will send to your trustee to satisfy your creditors.

Priority Debt

Priority debt such as alimony, child support, some taxes, and fees to government agencies must be paid in full. Your secured debt like your home and vehicle must be caught up to be considered current if you wish to keep those assets. After your priority debt and unsecured debt is paid, anything left will go to your unsecured debt such as credit cards and medical debt. If all of your property is exempt and your disposable income came to zero, your unsecured creditors will not receive any payments. At the end of your court-approved payment plan, any remaining unsecured debt will be discharged.

If you would like more information on Chapter 13 bankruptcy, contact a Plano bankruptcy attorney today to find out how you can get financial relief.