Payment Plans in Chapter 13 Bankruptcy

I previously wrote about payment plans in Chapter 7 Bankruptcy, and now I'm going to explain a bit about Chapter 13 payment plans. Chapter 13 payment plans are the same as Chapter 7 payment plans with one important difference. A bankruptcy attorney can accept payment from you after a Chapter 13 case is filed if the money comes from your Court-ordered Chapter 13 payment.

Here's a key point: Total Chapter 13 bankruptcy fees are generally $4,000 ($3,500 plus $500) here in Massachusetts because of a Court rule (you can read the Court rule here--this link will open a large PDF document on the Court website and the rule is on pages 83 and 84). Virtually all bankruptcy lawyers in Massachusetts charge this amount for a standard Chapter 13 case because of the rule. However, the key is this: the amount you pay out of your pocket varies. Lawyers who do a lot of Chapter 13 will sometimes only take part of the $4,000 upfront and let the rest be paid via your plan. This is good for you because the remainder that your lawyer collects normally just reduces the money that your creditors get without requiring that you pay more. We will sometimes charge people as little as $1,750 before a case is filed (which itself can be paid via a payment plan in the Chapter 7 style) and take the rest via their Court payment.

Contact us if you'd like to discuss your bankruptcy options in Massachusetts.

Another question you might have: How is my Chapter 13 payment determined?