As you may already understand from your personal research, Chapter 13 bankruptcy works more like a repayment plan rather than a debt elimination plan, as in Chapter 7 bankruptcy. With this, you must commit three to five years of finances towards this plan. However, there is no standard, “one-size-fits-all” payment plan; instead, the New York State Bankruptcy Court will look at your entire financial portfolio to rule on your required payments. That said, please continue reading to learn how much your monthly Chapter 13 payment will be and how an experienced Rockland County Chapter 13 bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help determine whether you are well-equipped to handle this long-term financial responsibility.
How does the court calculate my monthly Chapter 13 payment?
First of all, the means test functions for a different purpose in Chapter 13 bankruptcy than in Chapter 7 bankruptcy. Essentially, it is used to calculate your disposable income and total unsecured debts, to determine how much you should contribute towards monthly payments, and how long this plan should last.
The New York State Bankruptcy Court views your disposable income as what remains of your income after your reasonable and necessary monthly expenses are covered, such as your bills for housing, utilities, transportation, food, and urgent healthcare. This is so they can confirm that they will be proposing a feasible repayment plan in the first place.
From here, the court will plan for your secured debts (i.e., mortgage and car loans), priority debts (i.e., recent taxes and domestic support dues), and trustee and attorney fees to be paid through your plan. Then, whatever is left of your disposable income will be paid towards your unsecured debts, like credit cards and medical bills.
Because of this, your unsecured creditors may only receive partial repayments. But the court will conduct valuations of your non-exempt assets to ensure that these creditors at least receive in your Chapter 13 repayment plan what they would have in a Chapter 7 bankruptcy asset liquidation process.
Can I adjust my monthly payment amounts during my plan?
You may have accurately documented your assets and debts in your bankruptcy schedule and other related paperwork. Plus, the New York State Bankruptcy Court was meant to conduct a thorough, multi-layered calculation for your Chapter 13 repayment plan. Even so, you may eventually find your plan to be unmanageable and borderline impossible to keep up with.
This may be because you have undergone significant life changes that have impacted your finances negatively. For example, you got let go from your employment, you are involuntarily working reduced hours, you entered a personal injury accident that has left you with a medical disability, you lost a loved one who contributed to your household’s finances, etc.
Well, you may be relieved to discover that you may attempt to get your monthly Chapter 13 payment modified. To accomplish this, you may have your attorney file updated income and expense schedules with the court, along with a proposed, revised amount. You may need to do some legwork, as well, and gather evidence that establishes your drastic financial changes as real.
If you wish to explore your legal options moving forward, please allow a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C., to be your guiding force. Please schedule your initial consultation with our firm at the first chance you get.
