Say Goodbye to Unmanageable Debt
So, hopefully, that was self-explanatory, but I’ll expound a bit. In another video we talked about this, but why would you do a 13 and not a 7? In a 7, you don’t pay anything and the debts go away. Well, 7, your ability to do a chapter 7 is based on your income, and if it’s too high, you can’t do it. The cutoff currently for two people is between 45 and 50,000 gross income per year, and then you can add about 10,000 for each person in your household over that.
For example, three, you’re going to be 55 to 60,000, and if you’re too far over that, you’re not allowed to do a 7. Your expenses would have to bring you back down under it if you’re over. So if you make too much, you do chapter 13, in which case you pay for five years or 60 months, what you can pay, not what you owe. And if you normally could do a chapter 7, but you filed one, we talked about you can only do a chapter 7 once every eight years, or if you’re trying to save your house or some piece of property with a specific debt amount, you may want to file a chapter 13 anyway even though you could have filed a 7, or because you already filed a 7 in the last eight years. In either case, you might want to do a 13.
13 allows you to save that house. You’ll just have to make a big enough payment every month for your regular mortgage, plus at least 1/60th of what you owe. So if you owe 60,000 behind, you’re going to pay at least a thousand a month toward that 60,000 you’re behind, plus the regular mortgage payment, 6,000, I guess, $100 a month plus the regular mortgage payment. That’s how you save the house.
Let’s say you don’t have that issue, it’s just regular unsecured debt. Let’s say you have 60,000 in unsecured debt. I run all your pay stubs and your numbers, and I find out, according to the government, you have $600 a month left over. Well, you’re going to pay 600 a month for five years, and then that’s going to come out to $36,000. Then when your plan is done, you’re going to have $24,000 discharged away just like a chapter 7. Let’s say you have $100 a month that I find is your disposable income, and of course, I’m trying to get you as low as we can legitimately do, then you’re paying $100 for 60 months.
So 6,000 and 44,000 is going to get discharged, or 54,000 will get discharged out of that 60,000. So you get the concept, it’s based on what you can pay, not what you owe because you make too much money or you’re trying to save a piece of property. So that’s the first step in understanding chapter 13. That’s our three minutes of financial freedom for today. I’m Edward Kelly, a chapter 13 lawyer in OKC. You can always reach me at EdwardKelleylaw@gmail.com, K-E-L-L-E-Y law at gmail.com, or just call me at 580-478-3130. You can even reach me at www.oklahomacitybankruptcyattorney.pro.