There are many variables which determine how much a monthly payment under Chapter 13 will be. Filing for bankruptcy under Chapter 13, which is a reorganization of your finances rather than a liquidation as under Chapter 7, is a complicated process. In a Chapter 13 filing, you work with your attorney to develop a payment plan which will allow you to catch-up the amount you are in arrears on one or more debts—generally secured debts, such as home or car loans. The amount that you pay each month to the Chapter 13 Plan is primarily driven by your ability to pay—that is, the amount of money you have each month after certain basic expenses are deducted from your monthly income.
Chapter 13 is the primary means by which homeowners, for one, are able to save homes subject to foreclosure through bankruptcy. A home loan is a “secured loan,” which means that the loan is guaranteed to the provider of the loan by some property. In the case of a home loan, it is generally the home itself. Likewise with a car loan or a boat loan. Through a Chapter 13 bankrutpcy, a debtor may strip secondary liens from properties, “cramdown” the value of automobile or other secured loans, and take other steps that are not possible in a Chapter 7 bankruptcy.
The purpose of a Chapter 13 is to allow the debtor to emerge at the end of the payment period in better financial shape, hopefully not having lost their home, car, or other property in the meantime. However, a Chapter 13 is not complete and underway until it is “confirmed” by the Bankruptcy Court, and the process of confirmation may, in the back and forth that occurs between the filing debtor’s attorney and the US Trustee assigned by the court to the case, result in the plan payment moving higher and lower depending on the resolution to whatever objections to confirmation the Trustee may have.
If you are considering filing bankruptcy and, especially, if you are considering taking that step to rescue a home facing foreclosure or some other property facing repossession, your best bet is too make an appointment with a bankruptcy attorney as soon as possible. Only after a plan is fully drafted according to your particular circumstances, filed, and confirmed will it be possible to know what the exact amount you will pay each month under the plan is and, indeed, what the length of the plan even may be.
To get the best results possible, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.
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