Chapter 13 Payments Explained

How Chapter 13 Payments and Attorney Fees Work

If you have any questions or are confused, please call me directly! (984) NO-DEBT or  (984) 766-3328

✅ 1. Your Monthly Chapter 13 Payment is Fixed

• You pay a set monthly amount to the Trustee.
• This monthly payment stays the same throughout your Chapter 13 plan.

✅ 2. Attorney Fees are Included

• The attorney’s fee is capped by the District Court. Except in extreme cases, all bankruptcy attorneys in the District charge the same amount. In the case of the Eastern District of NC, it is $6,500. Because of this, fee shopping is generally not helpful since everyone charges the same amount. What you should look at is:
• What the law firm provides, (Here is a list of things we do that “they’ don’t: https://cameronbankruptcylaw.com/#what-we-do)
• whether the attorneys are “Board Certified”, and
• how well you get along with their staff.
• Chapter 13s generally last 5 years, so this is important.
• Your attorney fees are part of your monthly payment. Generally, a small amount ($500) is asked for upfront to cover some of the costs of making a petition.
• You do not pay extra each month—it’s already included.

✅ 3. Attorney Fees Come from Non-Priority Debt

• Attorney fees usually reduce what’s paid to non-priority unsecured creditors (such as credit card bills, personal loans, and medical debts).
• Those creditors get slightly less because part of their share goes toward attorney fees.

• Think of a Chapter 13 attorney fee like putting the lawyer’s bill inside the payment plan.

  For example, suppose the attorney fee is $6,500. You usually do not have to hand the lawyer $6,000 before the bankruptcy is filed. Instead, the unpaid attorney fee can be included in the Chapter 13 plan, and the Chapter 13 trustee pays the attorney from the money you send to the trustee each month. Federal bankruptcy law allows attorney fees to be paid as part of the Chapter 13 plan. Legal Information Institute

  Super simple example

  Say your Chapter 13 payment is $800 per month.

  You send one $800 payment to the Chapter 13 trustee.

  The trustee takes that money and divides it among the people who are supposed to get paid. That can include:

  Your attorney + car lender + mortgage arrears + taxes + other creditors + trustee fees.

  You are not normally writing a separate monthly check to the attorney for the $6,000 balance. The attorney gets paid through the plan according to the court-approved arrangement. United States Courts

  Here is the part that confuses people:

  It does not necessarily mean you take your normal Chapter 13 payment and then add $6,000 on top of it.

  The attorney fee is one of the expenses that has to be accounted for when the Chapter 13 plan is built. The exact payment depends on your income, expenses, debts, what must be paid through the plan, and local court rules.

  So the easiest way to explain it to a client is:

  “You don’t have to come up with thousands of dollars to pay us all at once. Most of our attorney fee is built into your Chapter 13 plan. You make your regular payment to the trustee, and the trustee pays us from that money.”

✅ 4. Flat Monthly Payment Means No Surprises

• Your monthly payment won’t increase because of attorney fees.
• Attorney fees are approved by the court upfront, so you’ll know your total payment clearly from the beginning.

🔹 How Your Flat Monthly Payment is Determined

After looking at a proposal from your attorney, the Trustee decides your Flat Monthly Payment. This is where getting a good, “Board Certified” attorney is important, because they know the loopholes and the particular Trustees’ likes and dislikes, and are respected in the bankruptcy community. The better your attorney knows and gets along with the Trustee, the smoother your case will go. Thankfully for you, attorney Sheree Cameron knows all the Trustees and is highly respected.

Your Flat Monthly Payment based on:

• Your family’s income
• The filer’s expenses
• The filer’s debts

🔹 Three Types of Debt in Chapter 13

Your monthly payment covers these categories:

1. Secured Debt

• Debts backed by collateral (like car loans or mortgages).
• Secured debts included in the Chapter 13 plan must be fully paid, except for certain real estate debts.
• Sometimes secured debts are paid separately, outside the Chapter 13 plan. It is not always an option.

2. Priority Debt

• Debts that must be fully paid.
• Examples include Trustee fees, attorney fees, and taxes.

3. Non-Priority Debt

• Typically unsecured debts include credit cards, personal loans, medical bills, and repossession debt.
• These are paid only if there’s money left after secured and priority debts.

🔹 How Your Payments are Applied

• If your monthly payment is larger than your Secured and Priority Debts, the leftover money goes toward Non-Priority Debt.
• If your monthly payment matches exactly your Secured and Priority Debts, non-priority debts (like credit cards) are not paid at all.
• Even in this case, attorney fees are manageable (typically up to about $100/month within the monthly payment with Cameron Bankruptcy Law).
• Your monthly payment always covers priority and secured debts in the plan.
• If you have no priority or secured debts, your entire monthly payment goes toward non-priority debts.

Typically:

• Your monthly payment is higher than your priority debt.
• Attorney fees do not increase your monthly payment amount.

Once we have all the details about your finances, we’ll confirm exactly how this applies to you!