Chapter 13 bankruptcy assumes that the debtor has sufficient income to pay at least something every month toward his or her debts. Unlike Chapter 7, in which the debtor pays nothing, but stands to have certain assets taken away from him or her, in Chapter 13, the debtor must make monthly payments but is allowed to keep all of his or her assets.
Chapter 13 bankruptcy is often the only type of bankruptcy available for some debtors, because they have too much income to qualify for Chapter 7 bankruptcy, because they have assets that would be subject to being taken away in Chapter 7, or both.
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The amount of one's monthly payments are based on what one can afford to pay after calculating all his or her monthly necessary living expenses. The payments are whatever amount remains of the debtor's monthly income after allowing for housing, food, clothing, shelter, transportation, insurance, utilities, childcare, support and certain other necessary expenses. This remainder is considered to be "disposable income" under bankruptcy law, and is therefore available to pay toward one's debts.
Secured and unsecured debts are treated differently under the Chapter 13 payment plan. Not all secured debts must be included in the plan. Whatever secured debts are included, must be paid off in the time frame proposed by the plan--either 36 or 60 months. Also, there are caps on the amount of debt one may have and still qualify for a Chapter 13 bankruptcy.
For advice specific to your situation, and further explanation of Chapter 13 and bankruptcy law in general, you should always consult with an experienced bankruptcy lawyer.
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