When you choose to file Chapter 13 bankruptcy, your attorney will create a customized repayment plan for you. The frequency of your payments and the amount you must pay is something your attorney will determine based on your income and debts. Here are some of the factors that will play a role in determining the details of your repayment plan.
The first thing that matters in a Chapter 13 case is the person's income. When you file for Chapter 13, this is one of the most important factors in the case. Your income will determine if you will have a three-year plan or a five-year plan, and this is determined by comparing your income to the average income in the state where you dwell. If you make more than the average income, you will most likely have a five-year repayment plan. You will have a three-year plan if you make less than the average in your state.
The frequency of your paychecks will often be used to determine how often you must make payments to the trustee. You might be required to make payments weekly, biweekly, or monthly.
The other important factor in determining the details of your repayment plan is the debts you have. When you visit with a bankruptcy attorney, he or she will take a close look at every debt and may classify them as priority debts or non-priority debts. Debts that fall into the priority debt category will be debts that you must repay in full. This may include child support, back taxes, and home loan payments. The goal of the repayment plan is not to help you repay the full amount you owe by the end of the plan, but it is instead to help you catch up so that you are current on all these debts when you complete the plan.
If you have enough income left after paying your priority debts, you may have to pay extra each month for the non-priority debs that you have, such as credit card payments.
When the attorney finishes looking at all your financial information, he or she will be able to give you an idea of how much you will have to pay for the repayment plan.
If you need help with your finances and do not know where to turn, contact a bankruptcy law office like Lifeline Legal LLP. When you meet with a lawyer, you will not be obligated to file for bankruptcy, but you will be able to learn more about it.