Our Bankruptcy Blog

How To Calculate a Chapter 13 Bankruptcy Payment

We understand that for those just beginning the chapter 13 bankruptcy process, the prospect of debt repayment can bring anxiety and uncertainty.

We want to help you feel comfortable with the repayment process.

So, we’ll shed light on how to calculate a chapter 13 payment, and give valuable insight on what to expect.

Understanding Chapter 13 Repayment Length

Before you can understand how to calculate a chapter 13 payment, it’s essential to know more about repayment length.

This is a major determining factor of your monthly payment amount.

With chapter 13 bankruptcies, monthly payments occur throughout a three to five-year period.

You work with your bankruptcy attorney to submit a repayment plan for the court’s approval, detailing your plan to repay creditors over three to five years.

Your monthly income—in relation to the median income in the state where you reside—typically determines the length of time that your personalized repayment plan lasts.

Those earning below the median income in their state, a three-year plan will likely be the length of repayment.

However, if you earn more than the state median income, you’ll pay into a five-year plan. You can modify this length of time in either scenario with the court’s permission.

The approved length of repayment will provide the basis for calculating your chapter 13 payment.

Minimum Monthly Chapter 13 Payment Amounts

To determine your monthly payment amount, you must complete the chapter 13 means test as a part of your paperwork submission to courts.

This not only determines how long your repayment plan will last but also the amount you must pay non-priority unsecured creditors in your bankruptcy.

You always need to consult with a trusted attorney for specifics related to your financial circumstances. Keep in mind how different forms of debt will influence your monthly payment amount:

• Secured Debts: Aside from mortgage arrears or lien stripping, you are typically required to pay off the entire loan through your repayment plan.
• Unsecured Debts: Some of this debt is dischargeable in chapter 13 bankruptcy. The chapter 13 means test will help determine what portion of this debt to include in your chapter 13 calculation.
• Priority Debts: Debts such as alimony, child support, or certain taxes are non-dischargeable in bankruptcy and must be repaid during your repayment plan.
• Fees and Interest: Bankruptcy trustees gain a percentage of liquidated assets, as well as all the money they distribute to your creditors. Interest must also be paid, which is typically just slightly above the national prime rate. In addition to debts, both factors will influence how chapter 13 payments are calculated in your case.

Let Us Help You Calculate Your Chapter 13 Payment

At Parker & DuFresne, we are in the business of bringing financial restoration to clients across Northeast Florida.

We understand that chapter 13 bankruptcy clients need the right repayment plan. This is one of the most important keys for a successful outcome.

We specialize in bankruptcy law. Likewise, we take an individualized approach to develop a tailored plan of financial restoration for every client.

To learn more about how chapter 13 payments are calculated, contact us to schedule your free consultation today!