Chapter 13 Repayment Plan

Many of our clients that wish to pursue relief through a Chapter 13 bankruptcy want to know what their payment is going to be. The amount of the payment depends on our client's financial circumstances. For our clients that are trying to save their homes, the amount of the payment will often be driven by how far behind the mortgage is. The Chapter 13 payment is used to catch up a delinquent mortgage over an extended period of time so that it is current by the time the last payment is made to the Chapter 13 Trustee. If a mortgage is 12 months behind, then the plan payment will need to be larger than if the mortgage payment is 6 months behind. Chapter 13 is also used to pay off existing car loans. If the car was purchased more than two and a half years prior to the date that the bankruptcy case is filed, then the car loan can be paid back based upon the fair market value of the vehicle (as opposed to what is actually owed). The less that has to be paid to a car creditor inside the bankruptcy, the lower the payment can be. As for general unsecured debts (such as credit cards, medical debts and payday loans), these are paid back at a percentage of what is owed (sometimes as little as a penny on the dollar). Whatever isn't paid back to general unsecured creditors during the Chapter 13 is discharged upon completion of the case just as they would be at the end of a Chapter 7. In nearly all situations, the amount paid to unsecured creditors inside a Chapter 13 is significantly less than what the minimum monthly payments are to such creditors outside of bankruptcy. For our clients that are unsure whether they want to pursue a Chapter 13 bankruptcy because of fear of the unknown payment, we will perform a bankruptcy analysis to determine the amount of the estimated payment. If our client wishes to move forward with the bankruptcy after the analysis is complete, we will apply the fee charged for the analysis against the cost of the bankruptcy itself. If you or someone you know is interested in exploring how a Chapter 13 bankruptcy could help get you on the right financial track, please give us a call or e-mail us through our web-site. We will be happy to schedule you for a free appointment.
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