How Many Months Must Be in a Chapter 13 Plan?

September 30, 2020

What Determines How Many Months are in a Chapter 13 Plan?

What exactly determines how much will be the amount of your Chapter 13 payment?  Your chapter 13 payment amount is calculated by three factors.   These three factors are your income, your assets, and the amount of debt that you are proposing to repay.    Your bankruptcy attorney and the trustee will calculate these factors to determine what your required monthly payment must be.  These three factors always control your payment amount.

Income Determines Your Chapter 13 Payment

First and foremost, your Chapter 13 payment amount is determined by your income.  If you make a sufficiently high income, you may even be required to repay all of your debts.   If you are required to repay all of your debts, then your Chapter 13 payment amount will simply be calculated by adding up the entirety of your debt.  Sometimes this will also include a limited interest amounts for items such as automobiles.   The trustee and attorney fees will also be added to this amount.  Then the amount will usually be divided by 60 months to determine your monthly payment.

If you make a lesser amount of income, you may only be required to pay a percentage of your debts.   This percentage is usually between 10% – 90% if you are not required to pay all of your debts back.  Rarely, the Chapter 13 trustee will even let you pay less than 10% back based if you have especially low income.

Assets Determine How Many Months are in a Chapter 13 Plan

Assets also determine what your Chapter 13 payment will be.   Your Chapter 13 payment can be increased greatly if you are required to “cover” non-exempt property with your payment.   For instance, if you have a paid-in-full house, you may be required to repay a much larger amount of debt if your bankruptcy exemption does not cover the entire value.   This can increase your payment dramatically in a way that has nothing to do with income.   It only has to do with protecting the non-exempt assets that you own.

What You Propose to Repay Determines Your Chapter 13 Payment

Your Chapter 13 payment is also determined simply by what you are proposing to repay.  For instance, if you are proposing to repay two large auto loans through your plan, your payment will likely be much higher than someone else who is only paying back unsecured debts.   Remember, any automobile you pay through Chapter 13 usually must be paid back in full (or at market value) with interest.   Other times, paying the mortgage payment and arrears can also drastically increase your Chapter 13 payment.  What you proposing to repay through your Chapter 13 payment can be the largest factor many times in what your Chapter 13 payment will be.

If you found this helpful, make sure to check out our Chapter 13 Client Tools information.

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