It’s no secret that living in Newark, NJ, costs more than living in other areas of the country. Inflation isn’t helping matters any.
So it’s natural to worry about whether Chapter 13 will be a good decision for you. There’s something terrifying about letting a faceless trustee determine how much money you get to live on.
Fortunately, many complete their Chapter 13 plans while meeting all their monthly living expenses. You can do it too.
How Your Plan Payments Are Determined
To determine what your Chapter 13 plan should look like, attorneys and trustees look at three important figures.
The first is the amount of debt you must repay in the plan. The second is your income. The third is your disposable income.
We calculate disposable income by deducting your monthly personal and household expenses. You submit a schedule to the courts reporting these expenses. Sit down with your bankruptcy attorney to determine what your budget looks like. How much do you spend on gas or school supplies?
We then use the Chapter 13 plan payment means test to determine a payment amount the trustee is likely to approve.
The trustee doesn’t set the plan. Your attorney creates the plan, submits it, and then the trustee approves it.
You’ll already have had a say in creating the plan before it ever gets to the trustee, and you should feel confident in your ability to live within the boundaries of that plan before it ever gets to the court.
You may have to tighten your belt more than you might like, of course. Your family might need to start choosing free entertainment alternatives over expensive ones. But necessities like food, shelter, and utilities should all be workable.
If the trustee rejects the plan, we’ll have to revise it, but the trustee would still base those revisions on realistic numbers. In some cases, we’ll determine that a Chapter 7 bankruptcy is the better choice for your case.
How Spending Works After Your Plan is Approved
Once the plan is approved, you make your Chapter 13 payment monthly. As long as you do, nobody is going back through your bank account line by line to determine if you overspent your grocery budget by $2 this month.
Nobody will call you up and scold you for spending $12 to get your Mom a Mother’s Day bouquet.
As long as you’re making your payments, how you spend your money remains your business. You would even have the option to reduce your expenses and free up more income if you wanted to. Nobody will immediately swoop down to demand you immediately put that extra money towards your debts.
Your Chapter 13 payment plan becomes a monthly bill like any other.
Get Guidance from a Trusted Bankruptcy Attorney
Filing a Chapter 13 bankruptcy is one of the most complex legal moves you’ll ever make.
It’s essential to have an expert bankruptcy lawyer by your side from the moment you enter the process.
If you’re considering Chapter 13 bankruptcy, don’t wait. Reach out to schedule a free consultation with our law office today.