100% Payment which is Under DMI

[SKJ]

Question, I have not yet filed Chapter 13, just researching to get as much information as possible so I can ask the right questions when interviewing attorney's.

Married, will file single, no secured debts, $137,000 unsecured in my name only. Only joint debt is the mortgage and it is current, never late.

I understand that I will be filing single but my husband's income/expense will be included to figure out DMI. If I calculate this on my own I come up with a DMI after every single expense I can think of including my husband's debt (some secured, some not) - which will not be included, of $3,500 a month.


My total repayment at 100% is 149,220 (including attorney fees & trustee fees) 60 months would be $2,487 a month.

So will they take the $2,487 a month or the DMI of $3,500 a month for less than 60 months?

Also, if I'm paying back $100 percent will they also take any tax returns or yearly bonuses?

[sophieanne]

Hi SKJ,

Your situation sounds somewhat similar to what my husband and I have just about completed (my case closes tomorrow!). Our payment was based on the total amount owed divided by 60 payments because we were in a 100% plan. So we did not pay based on DMI, we only paid what we owed. (based on total amt owed divided by 60). Our plan also did not require us to give tax refunds (not that there were any). We had to tell our attorney about bonuses and about an accident settlement I received. As the bonuses were not huge we were allowed to keep them. My accident settlement was not large but I had to give a bit of that to my plan, which wasn't so bad, since it helped pay our plan down a bit (every extra amount helps). We were in a 5 year plan but since all the creditors did not file a claim and since we were able to make extra payments, we have actually completed in exactly 48 months. Good luck to you as you start the process.

[SKJ]

thank you - that was the answer I was hoping for!

[sophieanne]

Your attorney will work with you on putting your budget together. There is definitely some leniency in some items when you're in a 100% plan so everything will look property balanced when your plan is put together..

[SKJ]

Ok, thank you!

[SKJ]

Hopefully, crossing my fingers that not all creditors will file claims but knowing how things go with me that is probably unlikely lol!

[justbroke]

When you are in a 100% plan you are not required to devote "all disposable monthly income" (DMI) to the plan. You only need to devote as much DMI as required to payoff all creditors plus the Trustee's fees (and attorney fees). It's just as sophieanne writes.

This will not, however, stop a Trustee from insinuating that you must commit ALL DMI to payoff the plan early. The bankruptcy code simply does not require you to do so. If you want to payoff early, that's your choice... but I would not do it by creating a plan that pays off the Plan early. I would submit a 60 month plan paying 1/60th of the total base amount each month. Then, if I had a lot of extra income near the end of my plan (my 60 months), I might consider paying the plan off early with the savings.

Remember, you really need to save during a Chapter 13 and you never know what's going to happen! Murphy happens! When you go through the plan and the Means Test with your attorney, hopefully they can find more things, but I don't think it will matter since you would likely still have significant income to pay 100%.

[sophieanne]

When you are in a 100% plan you are not required to devote "all disposable monthly income" (DMI) to the plan. You only need to devote as much DMI as required to payoff all creditors plus the Trustee's fees (and attorney fees). It's just as sophieanne writes.

This will not, however, stop a Trustee from insinuating that you must commit ALL DMI to payoff the plan early. The bankruptcy code simply does require you to do so. If you want to payoff early, that's your choice... but I would not do it by creating a plan that pays off the Plan early. I would submit a 60 month plan paying 1/60th of the total base amount each month. Then, if I had a lot of extra income near the end of my plan (my 60 months), I might consider paying the plan off early with the savings.

.

Which is exactly what we chose to do. We only paid the plan payment (based on total amount divided by 60) until we were in a good position and could pay extra (of our own choosing). Everyone has to make the choice that is most comfortable for them. I agree with Justbroke - I just want people to understand we reached a point where we could do the early payoff and took advantage of it. There was never any suggestion made by our attorney or trustee to do this.