CAN MONTHLY PAYMENTS MADE TO CREDITORS BE REDUCED TO AN AMOUNT I CAN AFFORD?

If you file a Chapter 7 straight bankruptcy, your debts will be discharged. That is, you will not be required to repay them. This allows you to be able to meet future obligations.

If you elect to repay your debts under Chapter 13, then you propose a plan of repayment.

In proposing this plan of repayment you first determine your expected future monthly income, or take-home pay. All types of income can be considered, for example: wages, commissions, child support, spousal support, social security, workers compensation, unemployment or disability benefits, retirement, dividends, etc., so long as it is regular income.

After determining income, you next set aside an amount to provide for your reasonable and necessary living expenses.

The amount of income remaining after providing for living expenses is the maximum amount you can afford to pay on your debts.

With this amount you propose a plan to repay your debts, ideally over a 3 year period. If you cannot repay your debts within a 3 year period, you may go longer, but no longer than 5 years.

If you are unable to repay your debts in full, then you are eligible to consider a Composition Chapter 13 plan of repayment. This is also called a best efforts plan or partial repayment plan. The idea is to pay as much as you can afford and at the end of the plan any debt is discharged, that is - you don't have to repay this debt.

In any event, Chapter 13 almost always reduces your payments to an amount you can afford.