Chapter 13 Repayment Plans

Georgia bankruptcy firm assists with structured plans to address debts

Almost anyone can find themselves in an unexpected financial crisis, even if they hold a steady job. At Jeff Field & Associates, we help Georgia residents construct Chapter 13 repayment plans so that they can receive protection from creditors while eliminating their debts on a schedule tailored to their circumstances. If you’ve fallen behind on payments and cannot get caught up, this form of bankruptcy might be what you’re looking for. 

What is a Chapter 13 repayment plan?

Our firm conducts a thoughtful review to help you decide if Chapter 13 is right for you. Sometimes referred to as a “wage earner’s plan,” a Chapter 13 allows debtors to stop creditor harassment and to pay off a portion of their debt over a three- or five-year period. If the plan is confirmed and the debtor complies with its provisions, any remaining balances on unsecured debts are eliminated once the period is complete. Many homeowners choose Chapter 13 because it enables them to maintain ownership of their residences.

Eligibility requirements for Chapter 13 plans in Georgia

It is much easier to qualify for debt relief through Chapter 13 because there is no need for the “means test” that is required for Chapter 7. If you are up to date on your tax filings, you earn enough regular income to cover your scheduled payments and your total secured and unsecured debts are not above the federal maximums, you should be eligible for Chapter 13. But the debt limits can change, so it’s important to discuss your eligibility with a knowledgeable bankruptcy attorney. 

Calculating monthly payments in a Chapter 13 bankruptcy 

A determination of your monthly Chapter 13 payment amount is made by calculating your disposable income. This is done by examining your average monthly income, your household size and your anticipated expenses for vital needs, such as food, clothing, shelter and vehicle costs. Utilities, education costs, insurance premiums, childcare expenses and phone service can also be considered. The value of these expenses must be reasonable based on market prices and IRS National Standards. Your remaining disposable income is then used to pay off creditors.

Modifications to Chapter 13 plans

While a Chapter 13 plan is pending confirmation, you must notify the court immediately of an event that might affect the calculation of disposable income, such as a medical problem or change in employment status. As long as proper procedures are followed, the plan can usually be adjusted prior to confirmation or modified by making a motion after confirmation. 

Creditor objectors to Chapter 13 repayment plans

A creditor might object to one or more terms of your proposed plan. For example, a creditor could claim that you will not earn the income necessary to meet your plan obligations, or they might allege that other creditors’ interests are being unfairly favored. If these disagreements and others cannot be resolved through negotiation, the bankruptcy judge will decide on the terms of the plan. 

Three-year vs. five-year Chapter 13 repayment plans

You will naturally want to get your life after bankruptcy started as soon as possible. For this reason, you might favor a three-year repayment plan rather than one lasting five years. However, the length of the plan is typically based on the relation between the debtor’s monthly income and the state median for a household of that size. Debtors whose income is less than the median can use the three-year schedule, while those with income above the median must use a five-year plan unless all debts can be fully paid off earlier. 

Contact a Georgia attorney about a Chapter 13 repayment plan 

Jeff Field & Associates develops Chapter 13 repayment plans for Georgians and guides them through the process. To set up an appointment, call 404-381-1278 or contact us online. We have locations in Athens, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale.