Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

How Much Do I Have To Repay?

On Monday, the 8th Circuit Court of Appeals issued a consumer bankruptcy decision concerning the required commitment period of a Chapter 13 Plan based on whether someone is over or under the median.  There has been conflicting opinions about what commitment period is required according to the language of the U.S. Bankruptcy Code which was amended in 2005, otherwise known as BAPCPA.

One thought is that if you are over the median family income for your family size, there is no choice and your commitment period is 60 months.  On the other hand, there has been Courts out there that have held that even if you are above the median income, if your disposable income as a result of filling out the required means test form is zero, then your commitment period only needs to be 36 months.

The 8th Circuit ruled that based on the language and the intent of Congress, if a debtor's income is above the median for their family size, their commitment period is determined by the statute regardless of whether or not they have any disposable income.  Therefore, if you are over the median, you must file a plan for not less than 60 months unless 100% of your creditors are paid in full.

Some good news did come out of the decision, however.  The Court said that the Means Test form is simply a starting point and determines a person's disposable income based on income that may no longer exist.  However, the ruling goes on to say that to arrive at projected disposable income for purposes of determining the correct plan payment, schedule I and J is used to provide a better understanding of what the debtor can truly afford.

You can read the entire opinion by clicking here:  In re: Craig Matthew Frederickson 

St. Louis bankruptcy attorney James Brown with Castle Law Group has been helping victims of foreclosure to save their homes for over 15 years.  To find out if this is an option for you, request our free book "7 Critical Mistakes To Avoid The Dismissal Of Your Bankruptcy Case" or call for a free consultation at 1-866-570-8484.  Castle Law Office helps families in St. Louis, Missouri and Illinois.