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The size of your monthly plan payment is determined by your monthly "disposable" income. This is the amount you can afford to pay after paying necessary reasonable living expenses (including insurance, mortgage payments, etc.). The reasonableness of those expenses evaluated in relation to IRS national standards, which represent the IRS’s determination of typical, reasonable expense for your geographical area.
Plan payments last for 36 months, or 60 months, if your income exceeds a certain amount. A 36 month plan debtor may choose, due to certain factors, to request more than 36 months to complete plan payments, , but in no event will plan payments last more than 60 months.
For example, if your payment analysis shows, that you can afford to pay $200.00 per month (above and beyond your normal living expenses), you would pay that each month to the Chapter 13 Trustee, who would in turn distribute the funds among your creditors. At the end of 36 months of plan payments, you are discharged from all dischargeable unsecured debts, regardless of how much your creditors have received from the Chapter 13 Trustee. In addition to your plan payments, you must stay current with any ongoing obligations you have to secured creditors, such as on your mortgage.
This information pertains to Chapter 13 and Chapter 7 consumer bankruptcy. Each state has bankruptcy laws which apply only in that state. The information contained in the preceding is provided for general information purposes and is not a substitute for a legal consultation and it is not intended as legal advice. Every individual's debt and financial situation is different and you should seek independent legal advice regarding you specific situation.
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