One of the most important elements of a Chapter 13 bankruptcy petition is the repayment plan. This plan must be accepted by the court trustee, who will ensure it aligns with a long list of requirements. To increase your chances of getting approved the first time, The Gil Law Firm in Dothan, AL, offers the following tips for preparing a successful payment plan.
3 Steps For Preparing Your Chapter 13 Repayment Plan
1. Establish Your Income
The amount of debt you have to repay depends upon a variety of factors, but most important is your income in relation to the median wages in your state. If your household income is below the median, you may be allowed to propose a 3-year payment plan that includes little to nothing for non-priority unsecured creditors. However, if your wages are above average, your plan must be 60 months long.
2. Identify Priority Creditors
Some creditors must be paid back in full, including most types of taxes, back child support, and unpaid alimony. Contributions to employee benefit plans and the administrative costs of the bankruptcy itself must also be paid off. Other claims, such as secured and unsecured debt, are treated differently depending on your income level.
3. Calculate The Payment
Once you have determined the amount you owe and the terms of the repayment plan, divide the total dollar amount by the total number of months to find your required monthly payment. Before submitting a figure, make sure you can meet this monthly obligation while keeping up with the cost of living and other essential payments.
Creating a repayment plan that meets the trustee's approval is one of the most complicated aspects of a Chapter 13 bankruptcy. With this in mind, many choose to consult with a seasoned attorney. Since 2000, The Gil Law Firm has helped countless borrowers regain control of their finances with personalized attention and an in-depth understanding of the law. Visit their website to learn more, or schedule a consultation today by calling (334) 673-0100.