How we Save you Money in Bankruptcy
The amount of money you must pay in a Chapter 13 Bankruptcy in Alabama depends on numerous factors: what assets you are keeping, the value of those assets, your income, the types of debt you have, and the amount of debt you have – all of these things influence just how much you will have to pay each of your creditors in order to obtain a discharge. In turn, this determines your monthly payment amount.
In most cases, your Chapter 13 plan is 5 years long – that means you’ll pay 60 payments. Your attorney should determine that payment amount at the very start of your case, and as long as you make all of your payments on time, that amount should stay the same for the entire 5 years. There are circumstances when the payment can rise – usually when new claims are added, like taxes that were due after the case was filed and not paid, or mortgage arrears that are added to the bankruptcy after it was filed.
There are also circumstances where your payment can be lowered: if you remove secured debts from the case – for instance if you surrender your home during the bankruptcy, whatever mortgage arrears you were scheduled to pay through the Chapter 13 plan are removed from the case, and you can lower your payment. Usually, your payment is not based on your income, so a job loss or layoff is typically not a reason to reduce a Chapter 13 payment.
For many clients with higher incomes or substantial assets, the amount of your payment depends directly on the amount of unsecured debt you have. In such cases, you can save a significant amount of money by reducing the amount of creditor claims that must be paid in your case. This requires time and work on the part of your attorney, and many attorneys never look back once a Chapter 13 case is confirmed.
We, however, take a hard look at every claim filed in these sorts of cases. We review each creditor and debt collector claim to make sure they are not asking for more money than they are owed. We also look for defects in the claim itself – was it filed on time? Was it filed properly? Did it have the correct documentation attached? If not, we object to it, and we routinely shave thousands of dollars off the amount of debt that our clients must pay.