How much will I pay each month into an Indiana Chapter 13 Bankruptcy

            This is an excellent question....and one that I must answer in the typical lawyerly fashion of, it depends.  I won't spend this posting in an in depth explanation of Chapter 13 bankruptcy.  However, Chapter 13 bankruptcy allows a 3 to 5 year repayment plan somewhat similar to a debt consolidation.  Each month the debtor in a Chapter 13 case makes a payment to a trustee.  The trustee takes a cut of the money to pay out creditors according to the Chapter 13 repayment plan filed with the bankruptcy court by your attorney.  If you are able to make all of your repayment plan payments then your debt will be discharged (relieved) at the end of the repayment period regardless of the amount you paid over that 3 to 5 years.

          So the million dollar question that every potential Chapter 13 debtor I meet with at Halcomb Singler, LLP, wants to know is....how much will my Chapter 13 payment be?  Unfortunately, most of the time this is not something I can answer at the initial consultation.  The reason for this is that a Chapter 13 bankruptcy payment is somewhat of a math problem to figure out.  There are different variants that go into each calculation that vary based on each individual debtor.  I typically must have a client's past 6 month income history as well as a detailed list of your household expenses as well as a listing of all of the debts that a client has in order to determine the amount of the Chapter 13 Plan payment.

           What I can say about Chapter 13 plan payments is that your payment will be no less money than you have left at the end of the month after paying your reasonable living expenses.  Reasonable living expenses include rent or mortgage payments, utilities, cable/internet, homeowners association dues, car payments for any vehicle you are keeping, clothing, insurance, medical costs, gas, vehicle maintenance, food, home maintenance, vehicle registration, etc.  Reasonable living expenses in "bankruptcy world" do not typically include house cleaning, traveling sports for children, a country club membership, entertainment expenses in excess of $100-$150 per month depending on your family size, etc.  It is best to discuss any atypical expenses with a bankruptcy attorney because there are some situations in which a larger expenses may be justified.  For example, higher than normal food expenses may be allowed if a member of your household has an illness that requires them to eat specific foods, etc.  However, it is important to stress that your Chapter 13 payment is not only determined by the amount of your reasonable living expenses.

            In addition, your bankruptcy attorney will prepare a "Statement of Disposable Monthly Income" to be filed in your Chapter 13 Bankruptcy.  This calculation is the Court's attempt to determine how much money a family of your size with your income should have left at the end of the month.  The amount left over in this test is what must be paid to unsecured creditors through your repayment plan....even if it is higher than what you believe you have left after your reasonable living expenses.

          After several years of advising Chapter 13 Bankruptcy clients, what I can say is that in my experience debtors can typically afford their monthly Chapter 13 payment.  It is certainly not easy and will require strict adherence to a budget.  In addition, a Chapter 13 bankruptcy can be an excellent tool to deal with debt for homeowners who have fallen behind on their mortgage, have income tax arrearages, or earn an above-average income.

          If you would like to meet with me for an initial bankruptcy analysis please contact me at 317-575-8222.  I am happy to review your debts, income, assets and expenses and give you my opinion regarding whether bankruptcy may be beneficial to you, which chapter I believe would most benefit you, which Chapter you may qualify for and answer any questions you may have regarding bankruptcy in general.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.