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Will I be able to afford making a Chapter 13 payment?

Although last week's post on this blog discussed one of the many advantages of a Chapter 13 bankruptcy, many Salem, Massachusetts residents may still be afraid to take this avenue as a means of getting debt relief for themselves and their families.

After all, a Chapter 13 requires that a person repay all or part of his or her outstanding debts and do so via a regular monthly payment over the course of three to five years. Failing to make the payment means that a person can find himself or herself without the benefit of bankruptcy protection. Moreover, any payments that were made under an unsuccessful plan are forfeit.

The idea of a Chapter 13 bankruptcy, however, is not to leave a person absolutely penniless and without any income whatsoever. A person who commits to a Chapter 13 bankruptcy need only pay his or her disposable income to repaying debts, meaning that there should be enough income left over at the end of each month for people to maintain a reasonable standard of living.

Of course, what constitutes "disposable income" can be up for debate. A bankruptcy official called the Chapter 13 trustee will usually want to make it seem like a person has plenty of money with which to repay his or her creditors. Therefore, a debtor in Massachusetts may want to have the assistance of a skilled Chapter 13 bankruptcy attorney who will advocate for his or her being able to keep as much income as legally allowed.

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