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One of the reasons to have to file a Chapter 13 bankruptcy is that you can afford to pay back some of your unsecured debt each month. This usually means that you have a somewhat higher income and the income is constant each month. The Means Test is used in a Chapter 7 case to determine whether you may qualify to file a Chapter 7 case. If you do not pass the Means Test, then the Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income is filled out to determine what you can afford to pay your unsecured creditors each month.
Every case is different given that everyone spends their income differently. What is universally the same is that first you have to pay back secured debts if you want to keep the collateral securing repayment. So if you want to keep your house you have to keep making the mortgage payment. If you want to keep your financed cars, then you have to keep making the car payment each month. Taxes are also deducted from your income along with living expenses, healthcare costs, retirement contributions, vehicle expenses and many other allowable categories. In many cases there is very little money left over each month to pay back unsecured debts such as credit card companies or medical bills. The result is that the Chapter 13 plan of reorganization may pay back 10% of your unsecured debts. The other 90% is discharged once the Chapter 13 plan is complete. To complete the plan each and every plan payment must be made.
Many clients are fearful of having to make a Chapter 13 plan payment each month. Chapter 13 is not that bad. On the up side, a Chapter 13 bankruptcy is only on your credit report for seven years. The Chapter 7 is listed for ten years. If the Chapter 13 plan is five years long there will only be two remaining years the bankruptcy is on your creditor report after you complete the plan.