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How Much Will I Pay During a Chapter 13 Repayment Plan?

Chapter 13 bankruptcy, often called wage earner's bankruptcy, requires a repayment plan. The repayment plan will last for three or five years, depending on your level of income. During this time, you'll pay a set amount to your creditors. If you complete the terms of your bankruptcy repayment plan, the remaining, unsecured debts will be discharged once it expires. Your attorney can help you understand the typical requirements of the Chapter 13 repayment plan, including how much you can expect to pay.

Bankruptcy-Related Costs

The costs related to filing for bankruptcy are not dischargeable. You'll be responsible for paying 100% of the court filing fees, attorney fees, and trustee commissions. Court filing fees are subject to change. As of 2016, the U.S. Bankruptcy Court for the Northern District of Illinois charges a filing fee of $310 for Chapter 13 bankruptcies.

Priority Debts

Certain debts are considered priority debts, and they must be paid in full during your repayment plan. If you owe back child support or spousal support, these are priority debts. Nearly all tax debts are also priority debts, depending on the date on which they were accrued. You're also responsible for paying any contributions you owe to an employee benefit fund, and, up to a certain threshold, any salaries, wages, or commissions owed to employees.

Secured Debts

Secured debts are those with collateral attached, such as a mortgage or car loan. Assuming you wish to retain ownership of the property, you must pay 100% of the amount of arrears on the loan. If you have any debt secured by a tax lien, you must pay that in full.

Unsecured Debts

Unsecured debts include credit card balances and past due medical bills. The amount you might pay depends on your specific situation—it may be anywhere from zero to 100%. Your lawyer will evaluate your finances to determine how much you might pay.

Your stable financial future is our mission here at Cutler & Associates, Ltd. We are a bankruptcy law firm with offices in Schaumburg, Homewood, and Skokie. Contact us at (847) 961-4572 to find out if Chapter 13 bankruptcy could be the solution you've been looking for.

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