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Figuring out a Chapter 13 repayment plan

Illinois residents who are deemed to have sufficient income so as to prevent them from pursuing Chapter 7 bankruptcy to resolve their debt issues may have another option. Chapter 13 bankruptcy is for individuals who have money to pay back their creditors to some degree but need a little help doing so. How can one's repayment schedule be calculated if a Chapter 13 filing seems appropriate?

The repayment calculation is not as simple and straightforward as one would think. Dividing the amount one owes by the number of months typically in a bankruptcy repayment period -- 36 or 60 months -- would seem like the right way to figure this out, but it is not. There is a lot more involved. It is necessary to look at not only debt amounts but what type of debt is involved. It is also necessary to calculate one 's disposable income -- how much an individual has left at the end of the month after paying for qualifying expenses -- and look at the value of any nonexempt assets.

After carefully reviewing all of this information, the amount one will owe during the bankruptcy period can be calculated by adding together the values of one's disposable income, priority debts and any nonexempt assets. Take that total and divide by the repayment term and that will produce one's monthly repayment obligation. It should be low enough to fit within one's current monthly budget.

Confused? It is okay, most people would be. Legal counsel is here and ready to help Illinois residents who are considering Chapter 13 in figuring out if it really is the best move for them and, if it is, what they can expect their repayment schedule to look like.

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