Personal Injury Lawyers
When people are in financial hardship for many years, they may start to consider their options in overcoming huge amounts of debt. Depending on how much you earn versus how much you owe in debt, it may be virtually impossible to pay off debts within a reasonable time frame, if at all. That is when a person may consider speaking with an attorney about whether filing for bankruptcy is right for them. Bankruptcy should not be taken lightly, and a serious evaluation of earnings and spending habits must be performed before moving forward.
How much of my debts will I have to pay back if I file for Chapter 13 bankruptcy?
How much of your total debts you must repay depends on the kinds of debts that you currently have. When filing, you will have to pay for bankruptcy filing fees and trustee commissions. You will also have to still pay for obligations such as child support, spousal support, and other related responsibilities as enforced by the court.
If you want to remain in possession of your secured property, such as vehicles or a home, then you will have to pay the total amount that you are behind on that loan. You will also be required to pay the entirety of the debt secured due to a tax lien. To find out more about a secured property, your attorney can answer any questions you may have.
However, where things begin to change is with unsecured debts. You may have to pay anywhere from zero to 100% of the amount you owe, based on the duration of your repayment plan, disposable income, and the total value of what credits would have received if you had filed for Chapter 7 bankruptcy. In general, how much you pay is usually equal to the value of the property that is not considered exempt under bankruptcy law.
How long does a repayment plan last?
Your repayment plan duration will depend on your earnings. Your plan may last around five years if your monthly earnings surpass the median monthly income for your household size within your state. That is unless you create a plan that pays back the entirety of your unsecured debts in a smaller time frame. If your earnings are lower than the median monthly income, then you can bring forward a proposition for a three-year plan (even if unsecured credits won’t be fully paid during this period).
Can I use funds from retirement benefits to meet repayment obligations?
Under Chapter 13 bankruptcy, the debtor must prove to a court judge that they have sufficient income to meet recurring payment obligations. The court does permit debtors to utilize income from various sources in order to meet their repayment plan, so income acquired from retirement benefits can be used. As you can see, filing for bankruptcy and creating a repayment plan based on earnings can be confusing. One of the best things any debtor can do is consult with an attorney near them for a case evaluation, before making any final decisions about bankruptcy.