Colorado 13 Question Again.... :-/

[mattfro]

Do I get an allowance for entertainment, groceries, phone, internet, cable, cel, etc?

And... If I have $45-50K equity in a town home, I know I will have to use that equity towards the debt, but who finances that loan? No mtg. company will even talk to me! Aside from that equity, I have about $500 per mo. left w/o entertainment, phones, cel, internet, cable even figured in there.

What if I am only plus $150 a month PLUS the equity in the townhouse? I guess that would be about a $900 per mo. payment on $60-65K debt.

I just don't know where that equity loan comes from???

[rrockinggramma]

what equity loan. A chapter 13 is not a loan. It is a way to repay your debts without making it a "secured" debt by tying it to your home.

[mattfro]

I was told I would have to pay out the equity I have in my rental property over the span of my payments. Well where is that $50k going to come from if I can't get an equity loan?

[helpless]

It all depends on the % amount that the trustee wants you to pay back. You lawyer should be able to tell you the exact amount that he is going to propose. Where that money comes from is in your payment. You will no longer be paying for any of your bills, so that should free up money to go to the trustee. In our case, we had more disposable income than we had equity, so we paid more than double the equity of our house. It really all depends on your disposable income after all your numbers are computed and accepted by the trustee.

[helpless]

Oh and yes you do get allowance for phone, groceries, etc. I filed old law, so I am not up on how much the allowance is. I am sure someone else will chime in with that one. Good luck.

[HHM]

First, the trustee does not determine a percent payback, chapter 13's don't work that way, there is no minimum percent that you must payback to creditors.

Your total plan payment is determined by 2 factors.

1. Your monthly disposable income x number of months in plan.
2. The liquidation value of your BK estate, i.e. the total value of all non-exempt assets (the liquidation value is the amount of money creditors would get "if" you filed a chapter 7, A chapter 13 BK requires that unsecured creditors receive at least as much as they would if you filed chapter 7). This factor sets the minimum amount the plan must pay.

So, to clarify the equity issue you raised. You DO NOT get a loan to pay the value of your non-exempt equity, its just that your disposable income must be enough to cover that value. For most people that file chapter 13, the equity question is moot because they have little or no equity in assets.

For example, if you have $45K of non-exempt equity, your chapter 13, over 60 months, must at least pay $45,000 to unsecured creditors (on top of your attorney's fee, trustee fee, and other claims that may be paid). Thus, assuming you have no other claims in your chapter 13, I would ball-park your payment at being around $915 per month. If you have more disposible income, you will pay the higher amount; if you cannot afford that amount, then your chapter 13 is dismissed.

[AtWitsEnd]

Another example..Our state allows $20,000 in home equity to be exempt. My husband and I are both filing so the exemption doubles to $40,000. Our house was appraised at $180,000. Our 1st and 2nd mortgage total $128,000. Take the appraised value 180,000 minus what we owe (128,000) equals $62,000 of equity. Of this $62,000, $40,000 is exempt so our plan includes a payback over 60 months of that $12,000 difference.