Filing Chapter 13 to Pay Off Your Debt
Filing Chapter 13 to Pay Off Your Debt
Bankruptcy lawyer Michael Sandler has successfully represented hundreds of clients in his legal career. His practice, The Law Offices of Michael J. O. Sandler PLLC, is located in Fairfax, serving all of northern Virginia. Sandler knows what to do if you are facing bankruptcy, and his practice is small enough to enable him to individually help every client.
Most people file Chapter 13 because they make too much money to qualify for Chapter 7, or because they need to use Chapter 13 to get caught up on secured debt such as a mortgage and therefore avoid foreclosure. Or perhaps they have a lot of assets that would be lost in a Chapter 7, such as vehicles, properties with equity, or other high-worth items.
As a bankruptcy attorney, I will first analyze my client's debt to determine if Chapter 13 is right for him. Then, I'll make a payment plan the client can stick to, ensure all property exemptions are in place, and help him file his bankruptcy paperwork on time.
Your Chapter 13 Payments
Not all of your debt will need to be paid off in a Chapter 13 case. If you're filing Chapter 13 because of a mortgage or vehicle arrearage, those arrearages will have to be paid. Likewise, priority claims also have to be paid in a Chapter 13. Priority claims include taxes from the past three years, child or spousal support arrearages, and wages that you owe to your employees.
Generally speaking, your Chapter 13 payments will be whatever your disposable income is at the end of the month. So if you make $3,000 per month and your monthly expenses are $2,700, then your monthly payment to the trustee will be $300. So over the course of 60 months, if it is a five-year plan, you will end up paying $18,000 to creditors. For a debtor who has a $10,000 mortgage arrearage with $5,000 in taxes, Chapter 13 example would be an attractive alternative. In the end, the bare minimum amount of money would go to the unsecured creditors and the remaining balances would be discharged.
The Length of Your Payment Plan
When it comes to your payment plan, the amount of income you make will determine the length of it as well as the amount of debt. If your household income is less than the household income of a family of your size in the region in which you live, then the applicable time period is 36 months, or three years.
So, for example, if you live in northern Virginia and you have a household of two people and you make less than $65,000 per year, the applicable time period would be 36 months. If you make more than that, the applicable time period would be 60 months. Even if the applicable time period is 36 months, if you cannot pay off the debts that you are required to pay off during that time period, such as the taxes and mortgage arrearages, then obviously you are going to be in Chapter 13 for a longer period of time.
Filing for Chapter 13 can be a confusing process in Fairfax. That is why I recommend calling us for a free at-home consultation to help clear things up. We will sit down with you in the privacy of your living room to help you come up with the right plan and get you back on the road to financial freedom.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
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