Filing for Chapter 13 bankruptcy can feel overwhelming, especially when you’re trying to understand how much you’ll be expected to pay each month. With bills piling up and finances stretched thin, the idea of adding another payment might seem confusing or even stressful.
The good news is that Chapter 13 is designed to make your debt more manageable, not worse. Understanding your monthly payment is a key step in taking back control of your financial future.
Understanding monthly payments
Chapter 13 is a type of consumer bankruptcy that allows those facing significant debt to reorganize it to become more manageable. A Chapter 13 plan uses your regular disposable income to eliminate debts, and then some of your remaining debt will be discharged.
Your monthly payments in Chapter 13 are based on a wide variety of factors, including your income, living expenses and the type and amount of debt you owe. The court will review your budget to make sure the plan is affordable for you while still paying creditors what’s required under the law.
Secured debts, like your mortgage or car loans, are usually given priority in your repayment plan, especially if you’re trying to catch up on missed payments. Unsecured debts, such as credit cards or medical bills, may be paid only partially, depending on what you can afford over the life of the plan. However, not all debts can be discharged. Some that typically can’t are:
- Claims for child support, alimony and educational loans
- Fines relating to drunk driving or criminal acts
- Long-term obligations like mortgages
No two repayment plans are exactly alike, and that’s where having the right legal guidance makes all the difference. If you’re feeling uncertain about what your repayment plan might look like, you’re not alone, and you don’t have to figure it out by yourself. Talking to someone who understands the process can give you the clarity and confidence you need to take the next step forward.