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Chapter 13 Repayment Plan in Iowa
Having a hard time paying your debts? Chapter 13 can be a practical solution. Your monthly payment is based on your budget, not what you owe. You can also catch up missed house or car payments over time.
A repayment plan can reduce monthly debt pressure and give you time to catch up missed payments. Filing starts the automatic stay, a federal protection that stops most collection activity.
Key Takeaways
- Your monthly payment comes from income left after necessary household expenses, not the total amount you owe
- Plans run three to five years
- You make one payment to the plan trustee, who sends the money where the plan requires
- Missed house or car payments can be caught up over time while you keep making the ongoing payments
- In most cases, a large percentage of eligible debt is wiped out after successful completion of the plan.
Your Balance Does Not Set Your Payment
Your discretionary monthly income is the money left after payroll deductions and necessary living expenses. That amount sets the monthly payment. The court compares claimed expenses with IRS standards. Amounts above the standard for a category are not allowed.
Three people could owe $30,000, $50,000 and $100,000 while having the same income and allowed expenses. Their monthly payments could be the same. A larger balance can leave more eligible debt unpaid when the plan ends, but it does not set the payment.
Where The Money Goes, And In What Order
You make one payment to a plan trustee, the person responsible for distributing the money. You do not make separate payments on each debt included in the plan. Some debts must be paid in full. Others receive what your budget allows.
- Certain taxes and domestic support are priority debts. The plan generally must pay these debts in full unless the creditor agrees to different treatment. The federal priority rules are in 11 U.S.C. 507.
- Missed house or vehicle payments can be spread across the plan while you keep making the ongoing payments. This can help if you are trying to prevent the loss of a vehicle. Our vehicle repossession page explains that issue in more detail.
- Unsecured debts are balances that are not tied to property, including credit cards, medical bills and personal loans. These debts receive what remains after required payments are covered.
Chapter 13 can change how you pay some loans tied to property. It cannot change the terms of a mortgage secured only by your home. It can still give you time to catch up the missed payments.
You can generally catch up those payments until the home is sold at a foreclosure sale. The outcome depends on the timing and facts of the case. Our page about missed mortgage payment help in Iowa explains the options.
Finishing The Plan
After successful completion, the court issues a discharge. That is the court order ending your responsibility for eligible balances left unpaid. It does not require full payment of every debt you had when the case began. Some debts, including certain taxes and domestic support, remain subject to separate rules.
Bankruptcy has a real advantage over debt consolidation. A consolidation loan cancels none of what you owe, and consolidation or settlement programs take roughly 18 to 20 percent of every payment as their fee before any of it reaches your debt. Neither carries a fixed end date. Chapter 13 and Chapter 7 work the other way around. Eligible balances can be discharged, which ends the duty to pay them, and the automatic stay applies the moment the case is filed.
The two chapters work differently. Chapter 7 can discharge many common unsecured debts, while Chapter 13 gives you time to catch up missed house or car payments. Our bankruptcy debt relief options page explains that comparison.
Three Years Or Five, And Your Income Decides Which
Plans run three to five years. Federal law compares your annual household income with the Iowa median for a household of your size. The rules appear in 11 U.S.C. 1322(d).
If your income is at or above the median, the plan cannot run longer than five years. If your income is below the median, the plan usually lasts three years, but the court can approve more time when there is a valid reason. Five years is the ceiling in either case.
For households with more than four people, the income comparison adds $11,100 a year for each additional person. The U.S. Trustee Program publishes the current figures, and they change more than once a year. We use the figure in force when we review your income.
What Happens If Your Situation Changes
Income and household expenses can change during a three-to-five-year plan. If you lose income or have a new necessary expense, we can ask the court to change your payment. The court must approve the change. Missing payments without addressing the problem can put the case at risk.
A large increase in income can also affect the payment. We help clients address changes while the case is open rather than waiting for missed payments to build up.
Your Plan Uses The Court’s Standard Form
The Southern District of Iowa requires the Model Chapter 13 Plan, Form B113. The court’s notice explains the form requirement, and it is the form we prepare your plan on.
The form allows extra terms when a case requires them. We identify any extra terms clearly for the court. We submit the plan to the court for approval, and creditors can object to its terms.
We help Iowa clients prepare repayment cases and understand how the payment fits their budget. We do not defend collection lawsuits, settle debts, sue collectors or provide credit repair. You do not need to decide which bankruptcy chapter fits before contacting us. You can request a free consultation or call 641-472-5141.
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What Our Clients Say
Past results do not guarantee a similar outcome. Each case is unique.
Frequently Asked Questions
How Is My Repayment Plan Payment Calculated?
Your payment comes from the income left after payroll deductions and necessary household expenses. The court reviews those expenses against IRS standards, and the payment must cover debts that Chapter 13 requires you to pay.
Will Owing More Increase My Monthly Payment?
No. The balance alone does not set your payment. Two people with similar income and allowed expenses can have the same payment even if one owes much more.
How Long Does A Chapter 13 Plan Last In Iowa?
Plans run three to five years. The length is based largely on how your annual household income compares with the Iowa median for a household of your size.
Do I Make Separate Payments To Each Company I Owe?
No. You make one payment to the plan trustee, who distributes the money as the approved plan requires.
Which Debts Must Be Paid In Full?
Certain taxes, child support and alimony usually must be paid in full through the plan. Other balances, including credit cards and medical bills, receive what the budget allows after required payments are covered.
Can The Plan Help Me Catch Up House Or Car Payments?
Yes. Missed house or car payments can be spread across the plan while you keep making the ongoing payments. The rules for a specific home or vehicle depend on the loan and the timing of the case.
What Happens If I Can No Longer Afford The Payment?
Tell us as soon as your income or necessary expenses change. A payment may be changed with court approval, but missing payments without addressing the problem can put the case at risk.
Do The Companies I Owe Negotiate The Plan?
Creditors do not approve the plan, but they can object before the bankruptcy court decides whether to approve it. Chapter 13 plans filed in the Southern District of Iowa use Model Chapter 13 Plan, Form B113.
