Hafemeyer Law

Chapter 13 Bankruptcy: Budget

Under a Chapter 13 bankruptcy filing, the debtor is required to make payments to creditors through a bankruptcy Trustee. A Trustee is typically an attorney that the Court has appointed to assist the debtor in following the payment plan that has been set by the Courts.

A typical Chapter 13 bankruptcy includes a repayment plan that can range from 36 to 60 months depending on the debtor’s particular situation.  Repayment plans typically require a debtor to remit payment to the Trustee on a biweekly or monthly schedule. Where available, the payments can be made through a payroll deduction.

Budgeting and managing day to day expenses can be an important part of ensuring the ability to complete the repayment plan laid out by the Court. In most circumstances, the Court may require the debtor to provide a budget. Prior to making the budget, it is important to get a firm understanding of the financial situation. Gathering all financial statements and compiling them into one document can help to establish a clear picture of all available income sources.

Another important tip is to write down a realistic listing of household bills and expenses, making sure to include items like vehicle maintenance, clothing, and home maintenance. Looking back over the last few months checkbook or bank statement transactions may give a good snapshot of monthly expenses.

When a debtor successfully completes the plan, he or she may be entitled to a discharge of remaining dischargeable debts if the following criteria have been met (a) all domestic support obligations that are due have been paid (b) the debtor has not received a discharge in a previous Chapter 7 or Chapter 11 bankruptcy in the last 2 years; and (c) completion of a financial management course.

Failure to meet the plan requirements may be grounds for the Court to dismiss the case or the Court may send the case into a liquidation, or Chapter 7, Bankruptcy.  

If you are interested in learning more about Chapter 13 bankruptcy and would like to discuss your personal financial situation, contact my office to set up a consultation.

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