The Cassidy Law Firm Blog

Thursday, June 12, 2014

Monmouth County Chapter 13 Bankruptcy: How Is the Amount of My Plan Payment Determined?

Over the past several years the number of bankruptcy filings across the United States has reached record levels. If you are considering bankruptcy you undoubtedly have a number of questions about the process and life after bankruptcy. Only an experienced Monmouth County bankruptcy attorney can answer specific questions about your situation; however, some general information may be helpful in the meantime. For example, if you file a Monmouth County chapter 13 bankruptcy you will need to submit a proposed repayment plan to the bankruptcy trustee. Understanding how your repayment plan payment is determined is certainly useful if you are considering bankruptcy.

Most individuals file either a chapter 7  bankruptcy or a chapter 13 bankruptcy. To file a chapter 7 you must pass the “means test” which compares your income to that of other similarly situated debtors in your area. You may only proceed under chapter 7 if your income is below the area median. Even if you qualify for a chapter 7 bankruptcy you may still decide to use chapter 13 bankruptcy if you have valuable non-exempt assets that would be lost in a chapter 7 bankruptcy. Unlike a chapter 7 though, chapter 13 bankruptcy requires you to repay most of your debts over an extended period of time, typically three to five years. To do this, you will pay the bankruptcy trustee a fixed amount each month and the trustee will then distribute the funds to creditors according to the plan approved by the court.

The amount you are required to pay each month will depend on a number of factors such as your income, the types of debts you have and where you live. In a chapter 13 bankruptcy debts are categorized as a priority, secured, or unsecured debt. All priority claims must be paid in full. Secured creditors must receive at least as much as they would have received had you filed for chapter 7. A way to estimate your minimum monthly plan payment is to add up all of your priority debts, all arrearages on all secured loans, all child support and alimony arrearages, and the balance due on car loans or other small loans that should be paid off during the course of the repayment plan. Divide the total by 36 and the result would be the very minimum you would be required to pay each month.

Because so many factors can impact the amount of your monthly plan payment it is imperative that you speak to an experienced New Jersey chapter 13 bankruptcy attorney who can review the specific details of your case and provide you with a more accurate figure.  Contact The Cassidy Law Firm for a free consultation to speak with an experienced chapter 13 bankruptcy attorney now.  The Cassidy Law Firm is conveniently located in Shewsbury, New Jersey.  We service all of Monmouth County, Ocean County, Middlesex County, Hudson County, and all of New Jersey.


*We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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