When financial hardships hit Colorado residents, it does not matter what job a person holds or what status they have, as it can be difficult for everybody. Even those seemingly at the "top" can find themselves in stressful times if debt accumulates beyond control. For these individuals, Chapter 13 bankruptcy may be an option to obtain debt relief.
A good example of this was provided recently by a state court judge who filed for Chapter 13. Despite having an income of almost $116,000 per year, the judge and his wife filed for bankruptcy because of liabilities of more than $577,000, as compared to total assets of just under $450,000.
A repayment plan was created in the judge's bankruptcy, calling for the payment of debts over a period of up to five years. Based on the couple's monthly income of over $9,000 per month, the judge's payment plan worked out to about $4,600 per month to the trustee. The judge also would relinquish some property under the plan.
The amount of repayment under any one person's repayment plan varies depending on the debtor's individual situation, but in general, a payment plan will be set up with manageable payments. Typically, priority debts are paid first, which includes things like taxes and child support payments.
Payments on secured debt also are included in a payment plan, such as payments for a car or home. Late payments on these items are also included into the plan. Finally, if there is disposable income left after secured debts are accounted for, the extra money is then applied toward unsecured debts.
Source: News Observer, "Durham judge files for bankruptcy," Jim Wise, Mar. 22, 2013