How much do I have to pay the trustee in Chapter 13
When you file a Chapter 13 bankruptcy, all your ongoing debt payments get whittled down to one monthly payment to the bankruptcy court’s trustee. In a typical case, you pay some amount for 36 to 60 months, and at the conclusion of the case, all or most of your debts are eliminated.
But, you ask, how much do I pay? This is often the main concern in Chapter 13 bankruptcy cases. Chapter 13 plan payments have a lot of components:
1. You must pay enough to pay your secured debts (typically other than mortgages) to be paid in full, along with some interest rate amount called the Till rate.
2. You must pay back spousal and child support arrearages.
3. You must pay back recent tax debts, called priority tax debts.
4. If you are paying back mortgage arrears and property taxes, you must pay about to pay these back.
5. If you are paying back past due property taxes, you must pay enough to pay the taxes plus the taxing authorities interest rates.
6. In most cases, you are required to pay some amount (though usually not the full amount of monies owed) to your unsecured debts – the debts that get wiped out in bankruptcy.
7. You must pay enough to pay your outstanding attorney fees.
8. You may be required to pay lump sum payments or a portion or all of your tax refunds above and beyond you monthly payment.
9. You must pay a fee, typically 10% of your payment, to the trustee to handle the case.
OMG! How much is that???
The truth about what you pay is it depends on the facts and circumstances of your individual case. What is a universal truth in Chapter 13 is that the number has to work with your budget. What does this mean? Its easier to show some examples, though your case will vary based on your situation.
If you are paying $1,500 a month in credit cards now, and a Chapter 13 filing reduces this to $400 per month, that may work with your budget.
If you are paying $1,500 a month on credit cards, $300 a month to the IRS, and $550 between two car payments, and a Chapter 13 filing reduces this all to $1,000 per month, paying off your cars and IRS debt while completely eliminating the credit card debt, that may work within your budget.
If you are paying the above, plus being garnished at 25% of your wages for a debt, which takes another $600 per month, even a $1,200 per month Chapter 13 payment may work within your budget.
The truth is what works for your case may not work for another’s case. But in all Chapter 13 cases, the math is much more nuanced that what is typically fond online. In fact, it’s so tricky, that I am not going to try to provide a formula in this posting. It’s simply two complicated and too fact specific.
How does it work though? The mechanics and Chapter13 case filing?