What am I paying for in a Chapter 13?

So, you're in a St. Louis Chapter 13 Bankruptcy... What are your monthly payments going toward? Here's some illumination on the matter.

Your Chapter 13 repayment plan sets up a very specific, regular way in which a you pay back your debts. The plan lays out how much each creditor will get paid, how long the plan will last, the values of your property, and more. You must pay some debts in full through your plan; others you may only pay in part. In order to have your payment plan approved by the Court, the plan must represent your "best effort" at paying back your unsecured creditors.

Several factors determine how debts are paid in a Chapter 13 case. Bankruptcy law takes into account your income and expenses, whether or not you are keeping property secured by debts, any special debts like child support and recent income taxes that must be paid, your attorney's fees, and sometimes the amount of assets you own that are not protected by available Missouri state exemptions. It’s even possible under some certain circumstances that you can actually pay less to your creditors under Chapter 13 than under Chapter 7.

Payments are made to the Chapter 13 trustee. The trustee then distributes payments to your creditors according to the plan. In order to facilitate this process, the trustee will also take a small percentage of your plan payment.

The money paid to creditors in a Chapter 13 plan is a best faith effort to show you are paying back debts. The remaining unsecured creditors that don't receive all of the money owed to them are discharged. This means that you will no longer be liable on unsecured debts after the completion of your plan. However, if you've filed a bankruptcy recently, you may still be required to pay back all of your debts. It's best to consult a qualified bankruptcy attorney to understand your exact situation.

Since 1997, the St. Louis attorneys at The Law Office of Tracy A. Brown, P.C., have helped hundreds in Saint Louis stop creditors from harassing, garnishing, and threatening clients through Chapter 7 and Chapter 13 bankruptcy filings that alleviate excessive debt. Contact us today to free your future from your past.