Chapter 13 Repayment Calculator
Estimate your monthly payments under a Chapter 13 bankruptcy plan.
Your Estimated Chapter 13 Repayment
$0.00Total Amount Repaid Over Plan: $0.00
Note: This is an estimate. Actual payments may vary.
Understanding Chapter 13 Bankruptcy and Repayment
Chapter 13 bankruptcy, often called a "wage earner's plan," allows individuals with regular income to reorganize their debts and repay them over a period of three to five years. It's a crucial tool for individuals who have valuable assets they wish to keep, such as a home or a car, but are struggling with overwhelming debt.
How Chapter 13 Works
The core of a Chapter 13 case is the repayment plan. Once a Chapter 13 petition is filed, an automatic stay goes into effect, which stops most creditors from pursuing collection actions, including foreclosures and repossessions.
You, with the help of your attorney, propose a repayment plan to the bankruptcy court. This plan outlines how you will pay back a portion of your debts over 3 to 5 years (36 to 60 months). Payments are typically made to a Chapter 13 trustee, who then distributes the funds to your creditors according to the plan's terms.
Key Components of a Chapter 13 Repayment Plan:
- Disposable Income: This is the amount of money left after paying your necessary living expenses (housing, food, utilities, transportation, etc.). Your disposable income is the primary source for your plan payments.
- Secured Debts: These are debts backed by collateral, like mortgages and car loans. Your plan must provide for paying these debts, either in full or the contract amount, over the plan's duration.
- Unsecured Debts: These are debts not backed by collateral, such as credit card debt, medical bills, and personal loans. You must pay unsecured creditors at least the amount they would have received if you had filed Chapter 7 bankruptcy (the liquidation chapter), or your entire disposable income over the plan, whichever is less.
- Priority Debts: Certain debts, like recent taxes and child support, must be paid in full through the plan.
The Math Behind the Calculator
This calculator provides an estimate based on a simplified model, focusing primarily on the repayment of unsecured debts using your disposable income. It assumes that your disposable income is the key driver for paying off unsecured debt within the plan's duration.
Disposable Income Allocation:
The calculator first determines the maximum monthly payment based on your Monthly Disposable Income and the Chapter 13 Plan Duration. This represents the total amount of funds you have available to pay towards your debts each month.
Monthly Payment from Disposable Income = Monthly Disposable Income
Total Disposable Funds Available:
The total amount you can pay towards unsecured debts over the entire plan is calculated by multiplying your monthly disposable income by the plan's duration in months.
Total Disposable Funds = Monthly Disposable Income * Plan Duration (in months)
Repaying Unsecured Debts:
The calculator then compares the Total Unsecured Debt with the Total Disposable Funds available.
- If Total Disposable Funds is greater than or equal to Total Unsecured Debt, your plan aims to pay off all unsecured debts within the plan's duration. In this scenario, the Monthly Repayment displayed will be your Monthly Disposable Income. The Total Amount Repaid will be the sum of your disposable income over the plan duration.
- If Total Disposable Funds is less than Total Unsecured Debt, your plan will pay creditors the total disposable funds available over the plan's duration. The Monthly Repayment calculation here is more complex and depends on how the trustee distributes funds, but for simplicity, this calculator uses the Total Unsecured Debt divided by the Plan Duration to show a potential minimum monthly payment if you were to pay off the full debt amount, or it defaults to the disposable income. A more accurate calculation would consider liquidation analysis and priority/secured claims. This calculator assumes the focus is on what disposable income can cover. If disposable income is insufficient to cover the "cost" of repaying unsecured debt by the end of the plan, it implies a dividend will be paid.
Interest Consideration:
Chapter 13 plans typically aim to pay little to no interest on unsecured debts. However, some jurisdictions or specific situations might allow for interest accrual. If an Annual Interest Rate is provided, the calculator can provide a rough estimate of the total amount repaid if that interest were applied, though actual Chapter 13 interest rates are often set by court rules and are usually lower than market rates.
Note: The interest calculation here is a basic amortization and may not reflect the specific rules of Chapter 13 interest application, which can be complex.
When to Use This Calculator
- Assessing Feasibility: To get a preliminary idea of whether a Chapter 13 plan is financially viable for your situation.
- Budgeting: To understand how much your monthly bankruptcy payments might be.
- Understanding Obligations: To see how your disposable income translates into debt repayment over time.
Important Disclaimer
This calculator is for informational and educational purposes only and does not constitute legal or financial advice. Chapter 13 bankruptcy is a complex legal process. The actual terms of your repayment plan will be determined by your specific financial circumstances, applicable laws, and the decisions of the bankruptcy court. It is essential to consult with a qualified bankruptcy attorney to discuss your individual situation and understand your options.