What Will My Chapter 13 Bankruptcy Payment Be?

If you are thinking about filing Chapter 13 bankruptcy, one question is probably keeping you up at night: "How much will my payment be?" That makes sense. Before you commit to a plan that lasts three to five years, you want to know what it will cost each month.

The honest answer is that there is no single number that fits everyone. Your Chapter 13 payment is based on your own income, your bills, your debts, and what you own. In this article, we will explain how the payment is figured out in plain English, so you can walk into your case feeling more prepared and a lot less worried.

The Short Answer

Your Chapter 13 payment is based mostly on your disposable income. That means the money you have left over each month after you pay your normal, reasonable living expenses.

The court takes your income, subtracts your allowed expenses, and what is left is what generally goes toward your plan. On top of that, your payment must be enough to cover certain debts you have to pay in full, like overdue mortgage payments, some taxes, and your car loan if you want to keep the car.

Because every family is different, two people who earn the same paycheck can have very different payments.

What Goes Into Your Chapter 13 Payment

Your monthly payment is built from a few moving parts. Let's look at each one.

1. Your Disposable Income

This is the heart of the calculation. The law says you must put all of your "projected disposable income" into your plan.

Disposable income is your take-home pay minus your reasonable and necessary living expenses. These expenses include things like:

• Rent or mortgage
• Utilities
• Food and groceries
• Car payment, gas, and insurance
• Medical bills and health insurance
• Childcare for minor children
• Clothing
• Basic phone and internet

The court uses national expense standards from the IRS to decide what counts as reasonable. These numbers change every year, so it is smart to check the current figures at irs.gov or ask your attorney.

Not every expense will be allowed. For example, courts in North Carolina have ruled that taking out a new loan to pay for an adult child's college is not a reasonably necessary expense. The plan is meant to cover basic needs, not every choice you would like to make.

2. The Types of Debt You Owe

Different debts are treated differently in Chapter 13. This affects how much you pay.

• Secured debts are tied to property, like a home mortgage or car loan. If you want to keep the property, you usually must keep paying.
• Priority debts are special debts the law says must be paid in full, like recent income taxes and past-due child support or alimony.
• Unsecured debts are things like credit cards and medical bills. These are often paid only in part, and sometimes only a small part.

3. What You Own

The value of your property matters too. In a Chapter 13 case, your unsecured creditors must receive at least as much as they would have gotten if you had filed Chapter 7 instead. So if you own valuable property that is not protected by an exemption, your payment may need to be higher to make up the difference.

How the Repayment Plan Works

Chapter 13 is sometimes called the "wage earner's plan." You make one monthly payment to a court official called the trustee. The trustee then pays your creditors based on the plan the court approves.

Here is the general order of how money is paid out:

1. Trustee fees and your attorney's approved fees
2. Priority debts, like certain taxes and support
3. Secured debts, like your mortgage arrears and car loan
4. Unsecured debts, like credit cards and medical bills

In recent years, the bankruptcy court that covers Greensboro, Winston-Salem, and High Point sent the largest share of plan money to secured creditors, followed by general unsecured creditors. The exact split in your case depends on your own debts.

You can learn more about how this process works on our Chapter 13 bankruptcy page.

How Long Will Your Plan Last?

Your plan length depends on your income compared to the median income for a household your size in North Carolina.

• Below the median income: Your plan is usually three years, though it can run up to five.
• Above the median income: Your plan must run five years.

A longer plan often means a lower monthly payment, since the same debt is spread out over more months.

Paying in Good Faith Matters Too

Here is something many people don't realize. Even if your math is correct, your plan must also be proposed in good faith. That is a separate legal requirement.

A federal appeals court covering North Carolina recently made this clear. If a person tries to keep expensive, luxury items while paying very little to creditors, the court can reject the plan, even if the numbers technically work. The goal is a fair, honest plan, not just a clever one. A good bankruptcy attorney will help you build a plan that holds up.

North Carolina Exemptions and Your Payment

Exemptions are laws that protect certain property so creditors cannot take it. The more of your property that is protected, the lower your payment may be, because there is less non-exempt value to account for.

North Carolina is an "opt-out" state. That means you must use North Carolina's exemptions, not the federal ones. Some of the most common include:

Most retirement accounts, like 401(k)s and IRAs, are also well protected. A 401(k) is usually kept out of your bankruptcy entirely. These rules can be tricky, so it helps to review them with an attorney who knows North Carolina law.

One more thing to keep in mind: even after your plan is confirmed, you generally cannot sell non-exempt property worth more than $10,000 without first getting the court's approval. Selling without permission can put your whole case at risk.

Chapter 7 vs. Chapter 13: How Payments Compare

Many people aren't sure which chapter fits their situation. Here is a quick comparison.

If you want to dig deeper, our Chapter 7 vs. Chapter 13 page breaks down the differences. You can also visit our Do I Need Bankruptcy? page to think through your options.

Can Your Payment Change Later?

Yes. Life happens, and Chapter 13 has some flexibility built in.

• If your income drops because of a job loss or medical problem, you can ask the court to lower your payment.
• If your income rises a lot, the trustee may ask the court to raise it.

To change your payment, your attorney files a motion with the court and shows proof of the change. The key is to speak up early. Keep your trustee and your attorney updated, and don't simply stop paying. Missing payments without action can lead to your case being dismissed.

What Should You Do Next?

Here are some calm, useful steps to take:

1. Gather your numbers. List your income, your monthly bills, and your debts.
2. Make a list of what you own and what you owe on it.
3. Don't guess. Online calculators can't account for North Carolina exemptions or local court practices.
4. Talk to an attorney who handles Chapter 13 cases in North Carolina every day.

A good plan is one you can actually afford and finish. That is far more important than simply having the lowest possible payment on paper.

Call to Action

If you are wondering what your Chapter 13 payment would be, you do not have to figure it out alone. Duncan Law can review your income, debts, and property and give you a clear, honest picture of what to expect.

You can schedule your free consultation online, or call the office closest to you. We serve clients throughout North Carolina.

• Greensboro: (336) 856-1234
• Charlotte: (704) 563-1224
• Winston-Salem: (336) 245-4294
• Asheville: (828) 348-5252
• High Point: (336) 294-5800
• Salisbury: (704) 297-4000

You can also reach us through our contact page or learn more about why people choose Duncan Law.