Can Chapter 13 Save your Finances?
If you are struggling to make ends meet but your income is greater than the median income for your household, you may be concerned that filing for bankruptcy will not benefit you because you do not qualify for Chapter 7. Many consumers are not aware of how beneficial a Chapter 13 bankruptcy can be for their financial situation.
When you file a Chapter 13, the court requires you to submit a repayment plan. You must pay your creditors a portion of what is owed. The amount you are required to pay under your Chapter 13 plan will depend upon your unique circumstances.
The means test or Form B22C will be applied to your finances to determine whether you are above or below the median income for your household size. The median income for each state is set by the U.S. Census Department. If your income is below the applicable median income level, your plan will be for a term of 36 months. The amount of your monthly payment to fund your repayment plan is the amount of your “disposable income” or the amount left remaining after you have paid your basic living expenses.
When your income is more than the median income for your household size, your bankruptcy lawyer will use the IRS standards to determine the amount of your monthly Chapter 13 payment. The IRS permits you take deductions for certain expenses including rent/mortgage, clothing, food, and other similar expenses. A knowledgeable attorney will help ensure that you gain the benefit of all applicable deductions in your individual circumstance. After the deductions have been made from your gross monthly income, the amount that is left remaining is your projected disposable income that you will pay to the Chapter 13 trust to fund your repayment plan.
If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get out of debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!
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