When you are past due on your mortgage and your lender is threatening foreclosure, it can be overwhelming. You may be wondering what you can do to try to save your home.
While no two cases are identical, most homeowners have several options available to them. Below are a few actions you may want to[…]
If you are considering filing a Chapter 13 bankruptcy, you will need to submit a plan of repayment for the court to approve. The Chapter 13 plan outlines how your creditors will be paid over a period of three to five years. Once the court has confirmed or approved your plan, you will make monthly payments to the trustee who will distribute the funds to your creditors pursuant to the plan terms.
Most clients want to know how much their monthly payment will be in a Chapter 13. The answer depends on the facts of your specific case. All of your creditors are provided notice of your bankruptcy and given a deadline to file a Proof of Claim. Each claim sets forth the amount the creditor believes is due. All of the Proof of Claims are reviewed by the trustee to determine the total amount to be paid under your plan (which is called the “base” of your plan) and the percentage to be paid to each creditor. Each creditor is paid according to the type of their debt – priority, secured or unsecured. Consider the following example:
If the base of your plan is $3600 over a 36 month period, your monthly payment is $100. However, if the amount that you must pay to cover all of the creditor’s claims exceeds the base amount, the court will consider your plan “infeasible.” This means that you will not be able to pay all of your debts according to the terms of your plan.
What can you do if your plan is infeasible? One of the most common solutions is to amend your plan to make it feasible. Below are a few ways you can amend your plan to make it affordable:
Make a larger monthly payment
Lengthen the term of your plan (if it is less than 5 years)
Make a lump sum payment
Alter the percentage to be paid to unsecured creditors
Set forth a gradual increase in your monthly payments as your plan progresses
If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.
When you think of bankruptcy, you probably think of Chapter 7 liquidation. However, Chapter 13 can provide individuals the opportunity to reorganize their finances and obtain relief from their debt.
Chapter 13 Bankruptcy Plan
To be eligible to file a Chapter 13 case, you must have a regular source of income to fund your plan of reorganization. A Chapter 13 plan outlines how you intend to pay your creditors over a period of three to five years. Once your plan is approved by the bankruptcy court, you will make monthly payments to the Chapter 13 trustee who will then distribute the money to pay your creditors according to their priority and the provisions of your plan.
Free initial Chapter 13 Bankruptcy consultation.
Your Chapter 13 Plan Pays Your Creditors According to Their Priority
The priority is established pursuant to bankruptcy law generally described as follows:
Priority claims. A priority claim is one that is given a special status by law and usually this type of claim must be paid in full. The most common examples of priority claims are certain types of taxes and child/spousal-support.
Secured claims. A secured claim is a loan that has collateral pledged to secure the debt. The two most common examples of secured claims are the mortgage loan on your home and vehicle loans. You must pay the secured lender at least the value of the collateral if you want to keep the asset.
Unsecured claims. An unsecured claim may be paid in full, partially, or not at all under your Chapter 13 plan. You must pay all of your “disposable income” (the amount left over after paying your basic necessities) over an “applicable commitment period.” As long as your unsecured creditors receive as much they would be paid if you had filed a Chapter 7 case, your plan can be approved by the court.
Contact a Brevard County Bankruptcy Lawyer at Faro & Crowder, PA
If you are interested in learning more about filing a Chapter 13 bankruptcy and how it could benefit you, contact us for a free consultation. Our office is located on Sarno Road in Melbourne, Florida and we serve residents and businesses of the Space Coast and Brevard County.