If you have large debts, such as credit card and other unsecured obligations, filing bankruptcy might be the best option for you. For some people, though, Chapter 7 is not a viable option. If it comes down to saving your home or your car, Chapter 13 might be your only choice. 
 

How Much Do I Have to Pay to Pay Off My Credit Card Debt?


In a Chapter 13 bankruptcy, a plan is proposed to pay what is called a “dividend” to debtors, such as credit card companies. A dividend is basically a percentage of the debt that unsecured creditors will receive from a Chapter 13 filer. 

For example, if a Chapter 13 bankruptcy plan promises 10% dividends, all unsecured creditors will receive ten cents for every dollar for every claim filed. This means that if the total amount of the unsecured filed claims in a bankruptcy petition is equal to $40,000, creditors will receive $4,000 over the span of the Chapter 13 plan.
 
There are typically three different circumstances:
  • For most clients, the dividend ends up being 10%.
  • For individuals and couples that land in the “higher earning” categories, the dividend is often more than 10% (although this is not always the case). 
  • Individuals and couples with large assets might have to pay higher dividends, all the way up to 100%. This can happen when people own a house that has accrued a large amount of equity.
 

How Does Paying 100% to Creditors Make Sense?


If you fall under the high-income categories, you might have to pay 100% dividends on your debts. It might not make sense to file bankruptcy if you have to pay 100% to creditors but think about this: Once the bankruptcy finalizes, all interest stops, too. The Chapter 13 payments are typically less than what you are currently paying to debtors and there is only one payment to make, as opposed to paying several different debtors.
 
Additionally, all collection actions are terminated, which means no one will be calling you or hassling you to pay this debt or that debt. There are no more lawsuits or garnishments, either.  Are You Considering Filing For Bankruptcy? If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.

Are You Considering Filing For Bankruptcy?

If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.

James Roswold
Connect with me
James Roswold is a Kansas & Missouri personal injury, workers comp, and medical malpractice attorney.