What determines 3 or 5 yr plan?

[toomuch]

One lawyer we consulted with a while back asked a few questions, looked at our credit reports and then scribbled figures of how much it would be for a 3 or 5 year plan. Even the 3 year plan was doable and is what I would hope for if we can't file a chapter 7.

Everything I have read so far says if you make over the medium, you have to go with a 5 yr plan. Or am I wrong?

Thanks,

Toomuch

[Boscoe]

I will give you the simple version and let the others fill in the details.

For a consumer bankruptcy case (which are most of them, all consumer debt), the "means test" determines your income and then compares that to the median income in your state. If you are over, then you generally have to file chapter 13 and are not eligible for a chapter 7. The chapter 13 is 5 years of payments.

If you are below the median income for your state, then you can file the chapter 7 and give up all non exempt assets. Or, if you have non exempt assets that you wish to keep, then file a chapter 13 and pay back over 3 years only.

[toomuch]

I will give you the simple version and let the others fill in the details.

For a consumer bankruptcy case (which are most of them, all consumer debt), the "means test" determines your income and then compares that to the median income in your state. If you are over, then you generally have to file chapter 13 and are not eligible for a chapter 7. The chapter 13 is 5 years of payments.

If you are below the median income for your state, then you can file the chapter 7 and give up all non exempt assets. Or, if you have non exempt assets that you wish to keep, then file a chapter 13 and pay back over 3 years only.

Ok. I get it. Thanks, Boscoe

Toomuch

[lrprn]

The chapter 13 is 5 years of payments. ... Or, if you have non exempt assets that you wish to keep, then file a chapter 13 and pay back over 3 years only.

Sorry, Boscoe - you don't understand Ch 13 just yet. It is complicated, so it's easy to get the wrong idea about how Ch 13 works, especially if you don't file Ch 13.

TM, under the current bk law, Ch 13 is either three or five years of payments.

When Ch 13 filers are just under the median or show not very much over $160/month of disposable income on their Means Test and Schedules, that's when a three-year plan is often proposed and approved by the trustee.

However, because most Ch 13 filers are either well above the median income for their family size in their state and/or they show far more than $160/month disposable income, almost all Ch 13 filers are placed into five year plans these days.

But under the right circumstances, you can still get a Ch 13 plan that's only three years long. And the length of your plan has nothing to do with whether you have non-exempt assets you are keeping or not.

[cso5@]

Except when it's neither 3 nor 5 years....

Like, mine is 58 months. New law.

With 4.97% to unsecureds, so it's not even the argument of, well, that's how long it will take to pay off all that file claims at 100%, given your amount of $$ you can put in the plan.

I am below the median for my state; I filed to save my house from foreclosure. But I have plenty of unsecured debt, too, and back state and federal income taxes. And interest and penalties. And a car that was "crammed down" too -- my filing had elements of just about everything in it, I think.

There is no rule, apparently, that it is either 3 or 5 years. I think each case is as individual as the filer's circumstances, and probably different lawyers / different trustees would handle the same case differently with different amounts of months for payback and different payback amounts.

Just sharing my experience. I am thankful every day, as tough as some days are, for this opportunity to be able to sort out my financial life.

[lrprn]

Like, mine is 58 months. New law.

Actually ours is 57 months - new law also.

There is no rule, apparently, that it is either 3 or 5 years.

Actually the current bankruptcy law is interpreted to say that, See http://www.uscourts.gov/bankruptcyco...chapter13.html - straight from the horse's mouth, so to speak

However, some local courts like yours and mine have decided that it's ok to "nudge" the law in this instance. Having a plan confirmed for a few less months than 60 in a 5 year plan gives the trustee a little "wiggle room" in case you have an emergency and need to push off a payment for a month or two without having to go back to court to explain why your plan has to run more than 60 months which the law specifically forbids. (At least, that's how our lawyer explained this to us when I asked )

If you would like to read the applicable part of the US Code Title 11 Chapter 13 for yourself, go to http://www.law.cornell.edu/uscode/ht...2----000-.html and scroll down to Section (d) (2) at the bottom.