Chapter 13 Bankruptcy Payment Calculator
Estimate your monthly repayment plan based on disposable income and asset equity.
Estimation Results
Estimated Monthly Payment: $0.00
Total Plan Repayment: $0.00
Understanding the Chapter 13 Bankruptcy Payment Plan
A Chapter 13 bankruptcy, often called a "wage earner's plan," allows individuals with regular income to develop a plan to repay all or part of their debts. Unlike Chapter 7, which involves liquidating assets, Chapter 13 focuses on a 3-to-5-year repayment period where you keep your property but pay creditors through a court-approved budget.
How Your Monthly Payment is Calculated
The Chapter 13 calculator uses two primary "tests" to determine what your monthly payment should be. The court requires you to pay whichever amount is higher between these two tests:
1. The Disposable Income Test
This is the most common method. The court looks at your Monthly Gross Income and subtracts Mandatory Deductions (like federal/state taxes, Social Security, and health insurance) and Allowable Living Expenses. These expenses are often based on IRS National and Local Standards for housing, food, and transportation. Whatever is left over—your "disposable income"—must be paid into the plan to satisfy unsecured creditors.
2. The Best Interest of Creditors Test (Asset Test)
Chapter 13 requires that your unsecured creditors receive at least as much as they would have if you had filed for Chapter 7. If you have "non-exempt" equity in assets (like a second home or a high-value vehicle that exceeds state exemptions), you must pay an amount equal to that value over the life of your plan.
Key Factors Impacting Your Plan
- Plan Length: If your income is above the state median, you are usually required to have a 60-month plan. If below, you may qualify for a 36-month plan.
- Secured Debt Arrears: If you are behind on a mortgage or car loan, the "catch-up" payments are baked into the monthly plan.
- Trustee Fees: The Bankruptcy Trustee takes a percentage of every payment you make, usually ranging from 3% to 10% depending on the district.
- Priority Debts: Debts like child support, alimony, and recent tax obligations must typically be paid in full (100%) through the plan.
Example Scenario
Suppose an individual earns $5,000 monthly. After taxes ($1,000), IRS standard living expenses ($2,500), and a car payment ($500), they have $1,000 in disposable income. Over a 60-month plan, they would pay $60,000. However, if they own a boat with $15,000 in non-exempt equity, the plan must ensure creditors receive at least that much. Since the disposable income ($60k) is higher than the asset value ($15k), the $1,000 monthly payment stands.
Disclaimer: This calculator provides a simplified estimate. Bankruptcy laws vary significantly by state and jurisdiction. Always consult with a qualified bankruptcy attorney to determine your actual eligibility and payment requirements.