How much do I have to pay per month in a Chapter 13 bankruptcy plan?

A New Jersey Bankruptcy Lawyer Explains Chapter 13 Bankruptcy Plans

A crucial aspect of a Chapter 13 bankruptcy in New Jersey revolves around determining the monthly payment amount and the payment plan's duration. Regrettably, there's no one-size-fits-all answer, as the specifics vary for each individual. This is due to various influencing factors, each requiring careful consideration to ascertain the appropriate payment structure. As a bankruptcy lawyer, I can help clients determine the best options for their specific needs.

Determining How Much You Can Pay

The first determination is how much disposable income (DI) you have available for payments. Simply put, it is how much money is left over from your net monthly income after all regular monthly expenses are paid. 

The actual calculation involves more than that, but you can find more information about how DI is determined.

Determining How Much You Will Need to Pay

The second is how much money you must pay through your plan. Certain debts must be paid in full for practical or legal reasons, and they can include:

• Arrears on a Mortgage
• Arrears on Alimony, child support, or other domestic support obligation (DSO)
• Taxes

Determining How Much You Will Have to Pay

Third, the bankruptcy code can create a "floor" or minimum amount that must be paid to creditors based on the "unexempt value of assets." The law protects your assets in bankruptcy through "exemptions." However, not all of these are unlimited.

If the value of something you own exceeds its exemption, the bankruptcy code can require you to pay that extra amount to creditors through your plan. Means testing as well can also create a minimum payment that must be made to unsecured creditors. So, as you can see, determining your plan payment can be involved.

What You Need to Do to File a Chapter 13 Bankruptcy

If you live in southern New Jersey, are considering filing a Chapter 13 bankruptcy, and are concerned about whether you can afford the plan payments, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you want more information about bankruptcy, download my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey.