A Chapter 13 Plan filed in Philadelphia is a personal reorganization plan. One of the items involved in the case is the repayment of certain debts under a chapter 13 Bankruptcy plan. Many individuals who become our clients ask us the question of how payments are figured in a Philadelphia Chapter 13 plan.
For purposes of this discussion we are assuming that there is no problem with the means test figures computed by the attorney. The means test is the subject of a different article Several issues are involved in figuring out what the debtor must pay in a Philadelphia chapter 13 plan.
The first is the person’s income. The trustee looks at the person’s income to see how much income is brought into the person’s home. Income includes, salary, wages, business income, rental income, retirement income, social security income, 2nd job income and other legitimate sources of income.
The debtor’s monthly living expenses are then calculated. Living expenses include the mortgage or rent, car payments, food, clothing, laundry, medical expenses, utilities, telephone, auto insurance, medical insurance, day care, schooling, personal care items, recreation, charity and other legitimate living expenses. The monthly expenses are subtracted from the debtor’s monthly income to calculate the amount of available money that is left over each month.
In addition, the trustee also looks at a person’s assets to see how much equity the individual or couple has in the house(s), as well as how much equity they have in any vehicles. The value of personal property such as pianos, diamonds, bank accounts, certificates of deposits, cash value of whole life insurance policies and other personal assets or claims are looked at. After taking into account all of a person’s exemptions, these items are then used to calculate the amount of non-exempt property that exists.
Based on our clients history in a majority of these cases, the required amount of monies that needs to be to paid into a Philadelphia Chapter 13 plan is “0” for unsecured creditors, which generally means that based on your assets, you do not have to pay back your unsecured creditors. You would only have pay back priority and secured creditors for property that you want to keep such as a home or car.
Finally, if there is money left over after figuring your monthly budget, you would generally pay in that amount of money for a period of 36 – 60 months. The types of debts to be paid in a Philadelphia Chapter 13 plan and how they are paid will be discussed separately in another article.