What is a Chapter 13 plan payment?
THE CHAPTER 13 PLAN PAYMENT GOES TO YOUR CREDITORS.
You will end up in Chapter 13 if you make too much money to file Chapter 7 bankruptcy based on the means test, or if because there is a compelling reason to file Chapter 13 over Chapter 7. On the most important concepts to understand for anyone who is considering filing bankruptcy is the Chapter 13 plan payment. Calculating your Chapter 13 plan payment is tricky–but it’s worth our effort! You need an attorney who is skilled at calculating this number and one who will be committed to defending the calculations. The Chapter 13 Trustees exist to maximize the payout to your creditors, and that means that you need an attorney to defend your income.
A PREVIEW OF HOW WE WE CALCULATE THE PLAN PAYMENT:
1st–What types of debt are we considering?
I’ll classify your debt according to its status–either secured or unsecured. I’ll examine when you incurred the debt, what the status of the collateral is, and whether the debt is given special ‘priority’ status by the bankruptcy code.
2nd–What does the means test say about your future disposable income?
Completing a Chapter 13 means test is my version of sudoko. It’s my job to closely scrutinize your income, expenses and deductions so that the result of the means test accurately portrays your disposable income. I stay up late on weekend nights working on means tests. Let me take a look at your numbers and see where we land.
3rd–What can you really afford to pay into the plan (and still afford to live)?
Are things expected to change income/expense wise in the future? Will there still be money left to put food on the table, gas in your tank, money into your retirement account, and braces on your kids teeth? There absolutely should be, or our work is not yet done. Let me prepare and defend your plan.
4th–Are you prepared to make the plan payment each month and get your fresh start?
This is the counseling part of my job. We need to explore what benefits from filing you will derive such that it’s worth it? I can usually demonstrate without a doubt that filing Chapter 13 will put you in a better place than you’ll be twisting in the winds. If I can’t see the benefit, I won’t file your Chapter 13 case.
STILL STRUGGLING TO DECIDE BETWEEN CHAPTER 7 OR CHAPTER 13?
There is no such thing as a plan payment in Chapter 7 bankruptcy. But, I want you to understand the basics of what is meant by plan payment–even if you plan to file Chapter 7. Why? Well let’s return to some of those compelling reasons I mentioned above. Even if you qualified for Chapter 7 based on the means test, you would file Chapter 13 if you are trying to catch up on your mortgage, car note, taxes, child support, or alimony. You would file Chapter 13 to strip your second mortgage. You would file Chapter 13 to cram down the value of your car, or other personal property. You would file Chapter 13 to get a reprieve from making payments on your student loans.