Chapter 13 Repayment Plans
In a Chapter 13 bankruptcy, none of your debts will be discharged initially. Instead, you will be put on a three to five-year repayment plan that allows you to make one payment a month. The bankruptcy court distributes your payment between your creditors according to their priority.
Depending on your income, you may not make enough each month to afford a payment that will fully satisfy your debts after the repayment period is over. In this case, you’ll need to show that you’re making the “best effort” you can with the resources you have available. Here’s what you need to know about the best effort requirement and how to get help filing for a Chapter 13 bankruptcy.
Proving Your Repayment Plan is Your Best Effort
Typically, you can prove that your suggested repayment plan is your best effort by calculating your necessary expenses and any leftover disposable income you have. The higher your monthly expenses like rent or mortgage, groceries, vehicle payments and insurance, and other necessities, the less disposable income you will have.
You can show receipts of your monthly grocery bill, utility costs, and other expenses and calculate the average. Subtract it from your income and the amount left over is your disposable income or the amount you can use to pay towards your debt. You can also show the court where you have tried to lower your expenses, such as canceling subscriptions or negotiating with your phone company for lower rates.
What If I Have Considerable Assets?
If you have considerable assets but little income, the court will assess the value of your non-exempt property, plus your disposable income, and compare it to your debt before accepting your claim. You will be required to pay whichever amount is higher. This prevents individuals with a low income who ordinarily would have to liquidate assets under Chapter 7 from filing a Chapter 13 and making payments based on minimal income versus assets owned.
Get Help from an Experienced Dallas Bankruptcy Lawyer
If you’re struggling to repay the debt you owe and can’t seem to get ahead of it no matter how hard you try, there may be options for relief available to you. A Chapter 13 bankruptcy is just one form of aid. We can go over your circumstances in detail and help you determine your best next step. Call today for your no-cost consultation at (469) 751-7469 (DFW) or 254-304-7161.