When debtors enter into a Chapter 13 bankruptcy, they commit to a Chapter 13 repayment plan. If you are considering filing for Chapter 13, how much of your debt that you will have to pay will depend on a variety of factors including your income, the types of debt you carry, and the size of your debt.
At the Law Offices of David Brodman, our Bronx bankruptcy attorney has more than 15 years of experience helping debtors find much needed debt relief through filing Chapter 7 and Chapter 13 bankruptcies. We have handled more than 5,000 bankruptcy cases, and we received Avvo's Clients' Choice Award.
While Chapter 7 is generally reserved for debtors with little or irregular monthly income, some debtors opt for Chapter 13 bankruptcy because it allows them to keep their home if they are facing foreclosure.
Under a Chapter 13 repayment plan, the debtor makes monthly payments to a trustee, who is an official appointed by the bankruptcy court to oversee the debtor's case. The trustee in turn takes the payment and pays the debtor's creditors.
How much of your debt will you have to repay? Under a Chapter 13 plan, some creditors are entitled to receive 100% of what you owe them, while others may receive very little or nothing at all. Priority debts include:
For unsecured debts, these will receive anywhere from 0% to 100%, depending on: how much you owe, your nonexempt property, the amount of your disposable income, and how long your Chapter 13 repayment plan lasts.
The length of your Chapter 13 plan will be calculated based on your current monthly income, and depending on that figure, your plan will last from 3 to 5 years.
There are many benefits to filing a Chapter 13; for example, you won't have to surrender any property, instead you repay your debts out of your income.
One of the greatest appeals of a Chapter 13 is that can stop foreclosure. Basically, once the bankruptcy case is filed, the foreclosure process stops and the debtor can repay their mortgage arrears over 5 years. Debtors can also try to modify their mortgage in their bankruptcy case with the oversight of the bankruptcy judge.