The number of months of a chapter 13 bankruptcy plan depends on numerous factors, including, the value of assets, amount of monthly disposable income, and the reason for the filing. The bankruptcy code requires a debtor to pay no less than all monthly disposable income to a trustee for at least 36 months. If the debtor’s household income for the six months prior to the filing is more than the average income of a household of the same size in New Jersey, most likely the plan will be 60 months. In other circumstances, the length of the plan may be between 36 to 60 months.
If the debtor has property worth a substantial value that is in excess of their bankruptcy exemptions and costs to sell the property, the amount of the unexempt property value must be paid to the trustee over the life of the bankruptcy plan. Although unusual, if the debtor has personal property or real estate that has substantial value, the debtor will likely be required to pay additional funds to the trustee over the life of the bankruptcy plan. Under this scenario, the debtor may require a longer monthly plan to allow for the additional funds that must be paid. The debtor may wish for a plan longer than 36 months to allow for payment of these funds over a longer period.
Also, a debtor may wish to file a chapter 13 case for a number of reasons, such as to cure mortgage, auto, child support, or income tax arrears. The funds that are required to cure certain arrears may require substantial payments that will be reduced by extending the months of the plan. Under this Scenario, assuming that all disposable funds are paid to the trustee on a monthly basis, the debtor may wish to extend the months of a plan, to a period between 36 to 60 months.
The numerous issues related to a chapter 13 are involved and the above explanation is extremely simplified. In fact, the number of months of a plan is affected by numerous factors, and the amount of months of a plan may be modified.
Please contact NJ Bankruptcy Lawyer Robert Manchel at 1 (866) 503-5655 to discuss your chapter 13 bankruptcy questions.