The Impact of Chapter 13 Repayment Plans

 Posted on January 21, 2025 in Chapter 13

If you are considering filing for bankruptcy, you are likely already quite used to making large monthly payments toward your debts. You have probably been putting most of your disposable income toward credit card bills, payday loan debts, home equity loan debts, or other repayments. You may have been struggling to keep up with these payments for a long time. Restructuring your debts through Chapter 13 bankruptcy can help you establish a single monthly payment that is precisely calculated so that you can reliably make it, but will probably not have a lot of disposable income left over afterward. It is important to consider the impact this type of repayment plan will have on your lifestyle for the three to five years you will be on it before the remainder of your debt is cleared away. An experienced San Antonio, TX Chapter 13 bankruptcy lawyer can help you understand how restructuring your debts is likely to impact your life.

Establishing One Manageable Monthly Payment 

If you have been scrambling to keep up with multiple monthly payments to different creditors, you may find that reorganizing your debts so that you are only making a single monthly payment is helpful and results in less stress overall. Trying to keep making numerous different payments can make your debt worse over time as you begin to rack up late fees and interest. Using Chapter 13 allows you to break the cycle and pay down your debt instead of getting buried deeper in it.

The downside is that this single monthly payment will be roughly calculated to equal your disposable income - the money you have left over after meeting your reasonable needs. While in the past, you could likely skip a payment here and there if you had an unusual expense, you will not be able to do this after filing for Chapter 13 bankruptcy.

On the positive side, many people find that the monthly payment they are expected to make after bankruptcy is lower than the total amount of each individual monthly payment they were making before combined. It is quite likely that you will be repaying a lower amount each month than you were before.

However, you should still expect to live a more thrifty lifestyle than you did before. You will likely have little left for luxury purchases like brand-name clothes, electronics, and nights out during the repayment term. Fortunately, the repayment term is very temporary, lasting only three to five years before the rest of your debt is cleared.

Contact a San Antonio, TX Chapter 13 Bankruptcy Lawyer 

Law Offices of Chance M. McGhee is dedicated to helping people find lasting debt relief through bankruptcy. Experienced Bexar County, TX bankruptcy attorney Chance McGhee will do all he can to help you secure a fresh financial start. Contact us at 210-342-3400 for a complimentary consultation.