Florida residents who choose to file for Chapter 13 bankruptcy will make payments to their creditors over the course of three or five years. The amount of that payment depends on a person’s income and expenses. Wages, unemployment benefits and other government benefits may be considered income for purposes of calculating a reorganization bankruptcy payment. Expenses could include a monthly rent or mortgage payment, utilities or an auto loan.
The difference between a person’s income and expenses is referred to as disposable income, and this is typically what a debtor is required to pay each month. However, that depends on the type of debt that an individual is hoping to get current on. Those who owe back taxes and other priority debts will need to pay those balances regardless of their current financial status.
Those who are past due on mortgage, auto or other secured loan payments must repay those balances if they want to retain the underlying assets. At the end of the repayment period, any unsecured debts that have not been repaid will likely be discharged. This means that a person is not required to make any future payments to creditors that haven’t been paid in full. Unsecured creditors must be paid at least the value of a debtor’s nonexempt assets in a Chapter 13 case.
Debtors looking to get current on an auto loan, mortgage or other debts may benefit from filing for Chapter 13 bankruptcy. Doing so may make it possible to repay creditors based on their ability to do so as opposed to making minimum payments set by their creditors. Furthermore, filing for Chapter 13 bankruptcy may allow a debtor to obtain an automatic stay from a repossession, foreclosure or other type of creditor collection activities.