handing over money

Tennessee residents who are looking at debt relief options want to make sure that any route they choose will actually be of benefit to them. Take Chapter 13 bankruptcy for example. With this type of bankruptcy, one will need to make payments to creditors over a certain time period before any remaining qualifying debts will be discharged. The repayment schedule is concerning to some people as they unsure if it is something that they will really be able to afford.

A lot goes into calculating how much one will have to pay monthly during a Chapter 13 bankruptcy period. It is not as simple as adding all of one’s debt together and dividing it out by the number of months in the relief period — which is either 36 or 60 months. Other factors need to be considered, such as:

  • One’s income level
  • One’s monthly expenses
  • Debt amounts
  • Property value
  • Type of debt

So, to figure out how much a repayment amount will be, it is necessary to determine one’s disposable income — this is the amount a person has left over every month after paying for one’s basic expenses. Then it is necessary to look at priority debts versus secured debts and any nonexempt assets. The amount one owes every month should be enough to pay off priority debts — such as taxes, alimony or child support — and enough to bring the balances on any secured debts — such as a home or car loan — current before the end of the relief period. Any leftover money will go to pay the creditors of any unsecured debts — such as credit card and medical bills. Any remaining unsecured debts can be discharged at the end of the bankruptcy period.

All this may seem a lot to take in, so here is the most basic explanation possible: a Chapter 13 repayment plan will be designed to pay creditors systematically while fitting within one’s current budget. It should be an affordable amount. An experienced Tennessee-based bankruptcy attorney will have the ability to review the specifics of one’s financial situation and help one figure out if this type of bankruptcy will best serve one’s interests.