You’re sitting at your kitchen table in Kansas City, staring at a pile of bills you can’t pay. Your mortgage is behind. Credit card companies won’t stop calling. The car payment is overdue. You’ve heard about bankruptcy, but you don’t want to lose everything you’ve worked for. Chapter 13 bankruptcy might be the solution you need.
If you’re thinking about filing, you probably have one burning question: what will my monthly payment actually be? The answer depends on several factors unique to your situation, but it’s not as complicated as the legal jargon makes it sound. Let’s break down exactly what you need to know about Chapter 13 payment plans in Kansas City.
How Does a Chapter 13 Payment Plan Work?
Chapter 13 bankruptcy is sometimes called a “wage earner’s plan” because it’s built around your ability to make regular monthly payments. Unlike Chapter 7, where you might have to give up property to pay creditors, Chapter 13 lets you keep what you own while you pay back what you can afford over time.
Here’s the basic structure. You propose a payment plan to the bankruptcy court that lasts between three and five years. Every month, you make a single payment to a court-appointed trustee. The trustee then distributes that money to your creditors according to the terms of your approved plan.
In Kansas City, your case will be filed in the United States Bankruptcy Court for the Western District of Missouri. Most of your interaction will be with your attorney and the Chapter 13 trustee assigned to your case, Richard V. Fink.
What Determines Your Monthly Payment Amount?
Several factors come together to determine what you’ll pay each month. Think of it like a formula, but one where the numbers are different for everyone.
Your Household Income
Missouri uses a means test to determine whether you qualify for Chapter 7 or must file Chapter 13. If your household income is above the state median for your family size, you’ll typically need to commit to a five-year plan, while income below the median may allow a three-year plan option.
Your income includes wages, self-employment earnings, rental income, and most other regular money coming in, and the means test examines your average monthly income over the six months before filing.
Your Necessary Living Expenses
The bankruptcy code allows you to deduct certain living expenses from your income. These include reasonable amounts for housing, utilities, food, transportation, healthcare, and other necessities. Missouri residents follow specific expense standards based on IRS national and local standards, though some flexibility exists for unusual circumstances.
What’s left after subtracting your allowed expenses is called your “disposable income.” Under 11 U.S.C. § 1325(b), this is the amount you should be able to contribute to your Chapter 13 plan each month.
The Types of Debts You Owe
Not all debts are treated the same in Chapter 13. The law divides them into categories, and each category gets handled differently in your payment plan.
Priority debts must be paid in full through your plan. These include certain taxes, child support arrearages, and unpaid alimony. Under 11 U.S.C. § 1322(a)(2), your plan must provide for full payment of all priority claims unless the creditor agrees to different treatment.
Secured debts are loans backed by property, like your mortgage or car loan. If you want to keep the house or vehicle, you need to stay current on these payments. If you’ve fallen behind, your Chapter 13 plan can let you catch up on the arrears over the life of the plan while making regular ongoing payments.
Unsecured debts include credit cards, medical bills, and personal loans. These don’t have to be paid in full. Often, unsecured creditors receive only a portion of what they’re owed, sometimes just pennies on the dollar.
The Best Interests Test
Here’s something many people don’t realize. Your unsecured creditors must receive at least as much through your Chapter 13 plan as they would have gotten if you’d filed Chapter 7 instead. This is called the “best interests of creditors” test, found in 11 U.S.C. § 1325(a)(4).
If you own property that isn’t covered by Missouri’s bankruptcy exemptions, its value affects your payment amount. For instance, Missouri allows you to protect up to $15,000 in home equity, or up to $5,000 in a mobile home. If your equity exceeds these amounts, your plan payments need to provide unsecured creditors with at least the value of that non-exempt equity.
How Long Will You Make Payments?
The length of your plan depends primarily on your income. Under 11 U.S.C. § 1325(b), if your current monthly income is below the Missouri median for your household size, your plan will generally last three years (36 months). If you’re above the median, you’re looking at five years (60 months).
There’s one exception. If your plan pays 100% of all your debts, you can finish early. Once everything is paid, there’s no reason to continue.
When Do Payments Start?
This catches people off guard sometimes. You must begin making payments to the trustee within 30 days of filing your bankruptcy petition. That’s right—before the court even confirms your plan, you need to start paying.
This requirement comes from 11 U.S.C. § 1326(a)(1). The trustee will send you information shortly after you file, telling you where and how to make payments. Missing that first payment can result in your case being dismissed before it really gets started.
How Do You Make Your Payments?
In Kansas City’s Western District, you’ll make payments to Chapter 13 Trustee Richard V. Fink. The trustee offers several payment options to make things easier.
Many people choose wage deduction, where the payment is automatically taken from your paycheck. Trustees prefer this method because it’s reliable and keeps you on track. You can also make payments through online systems like TFS Bill Pay, set up automatic bank withdrawals, or mail money orders.
One thing to remember is that you’re not paying creditors directly anymore. Every dollar goes to the trustee, who then distributes the funds according to your confirmed plan. This is actually a relief for most people because creditors must stop contacting you once you file.
What Gets Paid First?
The trustee doesn’t just divide your payment equally among all creditors. There’s a specific order established by bankruptcy law.
Administrative expenses come first. This includes the trustee’s fee (a percentage of what flows through your plan) and your attorney’s fees if they’re being paid through the plan. Next are priority debts, which must be paid in full. Then secured debts get their share, particularly if you’re catching up on arrears. Finally, whatever remains goes to unsecured creditors, divided proportionally based on what each is owed.
Can Your Payment Amount Change?
Life doesn’t stand still for three to five years. You might get a raise, lose your job, face unexpected medical bills, or experience other changes that affect your ability to pay.
The good news is that Chapter 13 plans can be modified. Under 11 U.S.C. § 1329, you can request to increase or reduce your payment amount if circumstances change. You’ll need court approval, and the trustee or creditors might object, but flexibility exists when you genuinely need it.
What Happens If You Miss Payments?
This is where things get serious. The trustee monitors your payments closely. If you fall behind, the trustee may file a motion to dismiss your case. Once dismissed, you lose the protection bankruptcy provides. Creditors can resume collection efforts, including foreclosure, repossession, and wage garnishment.
If you’re struggling to make a payment, talk to your attorney immediately. Sometimes the situation can be addressed through a plan modification. Sometimes you need to find a way to catch up quickly. Either way, don’t ignore the problem.
What About Your Mortgage and Car Payments?
If you’re keeping your house or car, you typically make those payments directly to the lender, not through the trustee. Your regular monthly payments stay current outside the plan. What goes into the plan is any past-due amount you’re catching up on, plus the monthly plan payment that covers your other obligations.
Federal law protects your principal residence from modification in most cases, as outlined in 11 U.S.C. § 1322(b)(2). This means you generally can’t reduce your mortgage balance or interest rate through bankruptcy, though you can cure arrears over time.
Real Numbers: What Might You Actually Pay?
Everyone wants a specific number, but Chapter 13 payments vary dramatically. Some Kansas City residents pay $200 per month. Others pay $2,000 or more. The difference depends entirely on the factors we’ve discussed.
A single person earning $45,000 annually with mostly unsecured debt and no non-exempt property might have a relatively modest payment. A family of four earning $100,000 with substantial tax debt and a mortgage arrearage will pay significantly more.
Your attorney will calculate your specific payment amount using your actual income, expenses, and debts. That calculation happens before you file, so you’ll know what to expect.
The Role of the 341 Meeting
About a month after filing, you’ll attend a meeting of creditors, often called a 341 meeting after the section of bankruptcy code that requires it. The trustee will ask you questions under oath about your finances and your proposed plan.
This meeting is conducted via Zoom for Kansas City cases. You’ll need to provide identification and proof of your Social Security number. Creditors can attend and ask questions, though they rarely do.
The trustee uses this meeting to verify information and identify any issues with your plan. Having your first payment already made by this time shows the trustee you’re serious about completing the plan.
Getting to Confirmation
After the 341 meeting, the court schedules a confirmation hearing. This is where the bankruptcy judge decides whether to approve your plan. The judge will confirm your plan if it meets all the requirements of 11 U.S.C. § 1325.
The plan must be proposed in good faith, comply with bankruptcy law, be feasible (meaning you can actually afford the payments), and satisfy the best interests test. If the trustee or any creditor objects, the judge will hear those objections before deciding.
Once confirmed, your plan is locked in. You make your payments as scheduled, and the trustee distributes the funds. Barring any modifications, you follow this plan for the full three or five years.
What Happens When You Finish?
Complete all your plan payments, and you’ll receive a discharge. This means the remaining balance on your unsecured debts gets wiped out. You keep the property you’ve been paying for through the plan. Your financial slate is clean, at least for debts that existed when you filed.
Some debts can’t be discharged, even in Chapter 13. These include most student loans, recent tax debts, debts from fraud, criminal restitution, and a few other categories. But for most people, the discharge at the end of a Chapter 13 plan provides real relief and a genuine fresh start.
Key Takeaways
- Your Chapter 13 payment amount depends on your income, expenses, and the types of debts you owe
- Plans last three to five years, depending on whether your income is above or below the Missouri median for your household size
- You must begin making payments within 30 days of filing, even before plan confirmation
- Priority debts like taxes and child support must be paid in full through your plan
- Unsecured creditors receive whatever your disposable income allows, which might be only a small percentage of what you owe
- The Chapter 13 trustee collects your payments and distributes them to creditors according to your court-approved plan
- Plans can be modified if your circumstances change, but you need court approval
- Missing payments can result in dismissal of your case and loss of bankruptcy protection
- Upon successful completion, you receive a discharge that eliminates remaining balances on most unsecured debts
- Missouri exemptions protect up to $15,000 in home equity or $5,000 in mobile home equity
Frequently Asked Questions
How much will my Chapter 13 payment be in Kansas City?
There’s no one-size-fits-all answer. Your payment depends on your household income, allowable expenses, the types of debts you owe, and any non-exempt property you own. Some Kansas City residents pay a few hundred dollars monthly, while others pay several thousand. An attorney can calculate your specific payment amount based on your financial situation.
Do I have to pay all my debts back in Chapter 13?
No. Priority debts like taxes and child support must be paid in full, and you need to stay current on secured debts if you want to keep the property. But unsecured debts like credit cards and medical bills only get paid to the extent your disposable income allows. Many people pay back just a small percentage of their unsecured debt.
What if I can’t afford my Chapter 13 payment?
If you’re having trouble making your payment, contact your attorney immediately. You may be able to modify your plan if circumstances have changed. However, if you simply can’t afford the calculated payment, Chapter 13 might not be the right option for you, and you may need to consider alternatives.
Can I pay off my Chapter 13 plan early?
Yes, but only under certain circumstances. If you can pay off all your debts in full before the three or five years are up, you can finish early. However, you generally can’t just pay the amount unsecured creditors were going to receive and stop early. The full plan commitment applies unless all debts are satisfied.
What happens to my tax refunds during Chapter 13?
The trustee may require you to turn over your tax refunds as part of your plan, particularly if you’re above the median income. This varies by trustee and your specific circumstances. Your attorney can explain how your tax refunds will be treated in your case.
Do I still have to pay my mortgage during Chapter 13?
Yes. If you’re keeping your home, you must continue making regular mortgage payments directly to the lender. What goes into your Chapter 13 plan is any past-due amount you’re catching up on, not your regular monthly payment.
How does the trustee know if I get a raise or bonus?
You’re required to report significant increases in income to the trustee. Annual tax returns are typically provided to the trustee throughout your case. If your income increases substantially, the trustee or a creditor might request a modification to increase your plan payments.
What if I miss a payment?
Contact your attorney right away. The trustee may file a motion to dismiss your case if you fall behind. Sometimes you can catch up by making a double payment. Other times you might need to modify your plan. The key is addressing the problem immediately rather than ignoring it.
Contact Us
If you’re considering Chapter 13 bankruptcy in Kansas City and want to know what your payment might be, Roach Bankruptcy Center, LLC is here to help. We take the time to review your complete financial situation and calculate exactly what your Chapter 13 plan would look like. We’ll explain how your income, expenses, and debts affect your payment amount, and help you decide whether Chapter 13 is the right choice for your situation.
Contact us today to schedule your free initial consultation and get answers to your questions without any obligation. Take the first step toward financial stability.
