A chapter 13 bankruptcy is similar to a debt consolidation plan. All of your unsecured debt will receive a percentage of what is owed. Normally that percentage is not 100%, or in other words, paying back the debt in full, but instead paying a small portion of it. A common question I hear is, who comes up with what amount is paid back, the creditors, the trustee, a judge?
The person that comes up with the payment amount is yourself and your attorney! This is one of the reasons I like chapter 13 plans so much. We are in control of what we put forth, and we decide if this is a payment you can afford. It doesn’t come top down, from a judge, your creditors etc.
How Disposable Income Affects Your Payment in MN
The payment in most cases is just driven by how much disposable income you have at the end of the month. If you aren’t paying any of your unsecured creditors (like credit cards) how much is left over, after rent/mortgage, food, cell phone etc.? If you only have a couple hundred left over, than that is most likely what your payment would end up being in your chapter 13 plan.
How Certain Debts May Increasse Your Monthly Payment Amount in MN
Sometimes in a chapter 13 there are certain debts we need to make sure get paid, like if you are behind on your mortgage or have tax debt. Then that type of debt will probably drive your payment plan a bit more. For example if you have $10,000 in IRS debt, we have to make sure over the life of the plan that debt gets paid in full. So now instead of your payment being $200 a month, we might need to raise it to $300 to make sure the IRS gets paid enough through your plan.
The trustee and a judge will always looks over everything to give final approval, but most often what we propose ends up sticking. That is because we file so many chapter 13 cases we know what works, and what doesn’t, and how to navigate working with the trustee.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT KAIN & SCOTT
If you think it’s time to speak to a bankruptcy attorney about your debt, please reach out to schedule a free strategy session by going to www.kainscott.com or calling 800-551-3292.