If you file a straight bankruptcy, your unsecured debts will be discharged, that is, you will not be required to repay them. This allows you to be able to meet future obligations. However, your monthly payments on secured debts, such as first or second mortgage payments or car loans, will probably be unaffected.
If you elect to repay your debts under Chapter 13, then you propose a plan of repayment.
In proposing this plan of repayment you first determine your expected future monthly income, or take home pay. All types of regular income can be considered: wages, commissions, child support, alimony, social security, workers compensation, unemployment or disability benefits, retirement, dividends, etc.
After determining income, you need to set aside an amount to provide for all of the reasonable and necessary living expenses for yourself and your dependents.
The amount of income remaining after providing for living expenses is the maximum amount you can afford to pay toward your debts.
With this amount established you can propose a plan to repay your debts, over a three- to five-year period.
If you are unable to repay your debts in full, you may still be able to file a Chapter 13 Plan. This is also called a best effort plan or partial repayment plan. The idea is to pay as much as you can afford and at the end of the plan, any unpaid debt is discharged, which means you don't have to repay this unpaid debt.
In any event, Chapter 13 almost always reduces your payments to an amount you can afford.
Each person's situation is different. What applies to one person may not apply to another. To determine bankruptcy options as they apply to you, an attorney competent in bankruptcy matters should be consulted.
If you wish to have a confidential appointment to discuss your bankruptcy options with an attorney in the Law Offices of John M. Miller, you may do so by calling (515) 225-3333 between the hours of 8 a.m. to 5 p.m.(Central Time), Monday through Friday.