A Second Chance to Your Financial Stability
So just to recap, Chapter 13 means that you’re making a monthly payment for three to five years. So that’s 36 to 60 months. If you are doing a 13 because you simply make too much money, you’re going to have to do a five-year plan, 60 months. If you’re doing it for some other reason and normally you could have done Chapter 7, then you only have to do it for 36 months. So there’s a prohibition. You can’t file a 7 more than once every eight years, but you can file a 13 in less than eight years after a 7. So that’s one reason you might have a 36-month plan.
If you’re trying to save your house, normally you would be able to file a 7. Another reason you can do the plan for as little as 36 months. You might need the whole 60 months to make up the difference that you owe in arrearage, but you could go as little as 36 months. So to wrap things up, we talked about saving your home, saving property. I’m just going to tell you how it works when you’re doing a 13, because you just make too much money. At that point, we are determining your plan payment based on what’s called your disposable income. Nothing to do with what you owe.
Let’s say you owe 60,000 in unsecured debt, medical, credit cards, medical bills, et cetera. We are going to calculate your income. We’re going to see how far over the line that chapter 7 line you were. Take your expenses back out, and we’ll have to come to an agreement with the trustee, which is the heart of a 13, on what is your disposable income, and then you will pay that for 36 to 60 months to the trustee who will then pay it to your creditors. And at the end, anything remaining is discharged.
So again, we’re not basing this payment at all on what you owe. You may owe 60,000. And then we find that, and this, you could never get a plan this low, but let’s just say for argument’s sake, we found that you had $10 a month left over. So over the course of 60 months, that’s going to be 600, 6,000. You can do the math, but that’s the extent of what you’re going to pay to your unsecured creditors even though you owe 60,000. The rest of it is all going to be discharged just like it would in chapter 7. So that’s the key phrase here. If you’re doing a 13 because you simply make too much money, we’re going to come up with a payment, and my job is to get that payment as low as legitimately possible for you, of course. But it is what it is.
The money you make and your expenses determine what’s left over. You’re going to pay that in for 60 months. If it pays everything, great. Obviously, you don’t have to pay more than what you owe, but If it’s less than what you owe, everything else gets discharged. So that is basically what Chapter 13 is. That’s going to be it for this series. Of course, we’re going to return and talk about Chapter 13 again and again. Hope everyone has a wonderful evening. I am Edward Kelly, a chapter 13 attorney in Oklahoma City. You can always reach me at EdwardKelleyLaw@gmail.com. That’s K-E-L-L-E-Y Law Edward Kelly Law gmail.com. Or just give me a call, at 580-478-3130. You can also reach out to me at oklahomacitybankruptcyattorney.pro.