Just saying the words “Chapter 13 Plan Payment” can strike fear in the hearts of any person, let alone someone who has been struggling to keep up on regular monthly obligations. However, once you learn how the plan payment is calculated, you begin to understand how effective your plan payment is in literally reorganizing your financial woes.
Car Payments
The first thing you may want know about Chapter 13 plan payments is that your car payment will be figured into the payment. Your car payments will more than likely be paid off in full during the course of your plan.
This is something that you should consider when you learn about what your proposed plan payment will be. Depending on the situation, it is not uncommon for our firm to be able to calculate your plan payment to an amount comparable to, and sometimes less than, your current car payment.
Mortgage Arrearage
Your mortgage arrearage will be calculated into the plan payment as well. This will be paid off in full and during the course of your plan.
The threat of foreclosure is often a driving force for bankruptcy filers. A Chapter 13 will allow you to pay off the arrearage you owe during the course of your bankruptcy using your disposable income.
Once you have successfully completed the terms of your bankruptcy, you will be caught up on whatever arrearage was owed on your mortgage once the case was filed.
Read our blog, “Mortgage Payments In A Chapter 13 Bankruptcy” to learn more about keeping up on your mortgage during your bankruptcy.
Other Secured Debts
Should you have other secured debts these debts may be figured into your plan payment as well. Aside from car payments and mortgages, secured debts would be any purchase money security agreements you entered into with your creditors. The most common types of these debts we see are Nebraska Furniture Mart accounts that were used to purchase furniture or Kay Jewelers accounts that were used to purchase jewelry.
Attorney Fees
Typically, our client’s cannot afford to pay the attorney fees associated with a Chapter 13 bankruptcy in one lump sum. For this reason, the balance of your attorney fees will also be figured into your plan payment.
Trustee Fees
The Chapter 13 Trustee has many duties associated with you case. The trustee’s office is charged with the duty of distributing and collecting the payments, overseeing the classification of your debts, issuing regular reports and many other tasks that are necessary to keep your plan running smoothly. For this reason, you will also have a portion of your monthly plan payment go to a trustee’s fee.
Priority Unsecured Debts
Should you have priority debts, such as taxes and child support, these will be paid through the plan as well. These debts are paid before any unsecured, general debts.
To learn more about the advantages to individuals who are struggling with child support, read our blog “Child Support In Bankruptcy.”
Non-Priority, Unsecured Debts
These are your general debts such as credit cards, medical bills and collection accounts. These debts are paid a percentage of anything left over after the debts listed above have been paid.
To find more information about whether or not bankruptcy can benefit your situation, schedule your free initial consultation with one of our attorneys today.