100% payback

[brokeNconfused]

im getting a bit nervous. I was set at a 250 a month payment in the schedule, but i keep seeing a lot of people talking about a 100% payback. I am far from that. If we could do a 100% would we be in 13 at all? am i missing something? My attorneys office has a good rep and does nothing but bankrupsy so i am hoping they did this right and nothing will go up, but like i said. i am a bit worried now.

[rrockinggramma]

every chapter 13 is individually tailored. Some people pay back 100 percent and MANY do not. My plan started out at 10 percent. Then due to the lack of claims filed, the trustee upped it to 35 percent. When that mark was reached and I was still under the 36 month mark, the trustee upped it again to 61.56 percent.

So if all you can afford is 250 a month and your unsecured creditors get 0 percent of that, then that is your plan.

Every plan is different.

[JollyGG]

It does seem confusing when you see people in a 100% payback plan. There are a couple of cases where this happens.

1. Almost all debt is secured debt the debtor is trying to save. For example a debtor got behind on there house and car and the lenders are threatening to reposses. The debtor can save those secured assets in a chapter 13 assuming they can make the payments. It gives them a chance to get caught up.

2. A high income filer who probably could pay their debt if it wasn't set at a 32% interest rate may file so that the protection of the bk courts mandate an interest rate and so that the automatic stay prevents them from constant harasment by the creditor.

3. A filer who files, has X amount of disposable income, but only a few creditors file claims. For examples someone who owes 60,000 in credit card debt, has $250 a month in disposable income, so would pay 15,000 over the course of their plan, only three creditors file a claim, the total claims are around or less than 15,000. Therefore the debtor pays every creditor who files a claim 100%. This senario happens but is very rare.

The amount you pay each month has very little to do with how much you owe unsecured creditors and everything to do with how much you can pay each month. Your disposable income is calculated and that is how much you pay. No matter what percentage to unsecured that ends up being. (Remember that if you have secured property included in your plan or priority debt like income tax this is not always the case).

[brokeNconfused]

I see, so what is the reason a plan goes up after the 341? I keep reading about this happening too. I have secured debt in the plan, in a way. I gave back a vehicle so i guess now technically its unsecured now.

[JollyGG]

Up until confirmation your lawyer and the trustee are working out a comprimise to figure out how much disposable income you have. The trustee's job is to find as much as possible for your creditors your lawyers job is to keep as much as possible for you. So your lawyer submits a plan. The trustee then often comes back with an objection to parts of your expenses or income. For example they may ask you to justifie the amount you pay in medical expenses, or not allow so much for entertainment, or whatever. Your lawyer and the trustee go back and forth trying to come up with a montly payment that you can afford, but still pay creditors as much as possible. Once all that negotiation is done the plan is confirmed.

After confirmation the plan will usually only change if their had been an increase in income (some trustee's require to see your income taxes each year). Or some other change related to secured debt being paid in the plan (for example you pay your normal mortgage payment in the plan, you have an ARM and the ARM adjusts up, well then your monthly payment also adjusts up).

Now remember I did a chapter 7. The information I have presented is only my understanding of the process from seeing others go through it on this board.

[TexasLadybug]

Hi Everyone! I too am in a 44-month 100% plan. I filed in September 2005 (just before the laws changed). The way I understand how this works is this: all priority and secured claims are paid first. Then the unsecured creditors (i.e., credit card companies) who filed a claim will be paid. It is unlikely they will get 100% of what is owed to them. When your payments have reached the total amount of your plan, the trustee will do a final audit and if all is OK the court will issue the discharge. The unsecured creditors get only what has been paid to them at that point and no more. If I am incorrect in my understanding, someone please correct me.
Texas Ladybug

[liz417]

Jolly and TLadybug summed it pretty nicely. There you have it....
I might add that in a ch 13, depending on the trustee, you may be require to turn over any annual bonuses and tax refunds.

[kitters]

My attorney is filing my case Monday. I also will be doing 100% payback, the only secured creditor is my mortgage company (I have 5 months arrears) but several credit cards (ugh). The reason I'm having to go this way is because I have 1/4 interest in our family farm which we set up as a trust after my dad died. Either my brothers & sister would have to buy out my share (which none of them can afford to do) or it would all have to be sold, which would destroy my brother's livelihood (he farms it). I worked up an extremely tight budget so that I can pay $500/month which was what my attorney had said should satisfy the trustee so he would not force the sale of the farm and still be able to complete the plan within the time frame. I'm really nervous because things are going to be so tight but I will do what I have to do to avoid losing the farm that's been in my family for 120 years. (thanks, Capital One! ). So, every case has different circumstances why there might be 100% payback

[brokeNconfused]

yea i am learning now. So far i see only two claims, but sure my credit card compaines will soon. I have no Arrears THANK GOD so as far as that goes my plan should be pretty close. My attorney said the amounts in budget were whats allowed in my state. We still had to cut back bit to get the amount up to required level. My state has a $250 min monthly payback, or at least thats what the trustee asks for.

[justbroke]

1. Almost all debt is secured debt the debtor is trying to save. For example a debtor got behind on there house and car and the lenders are threatening to reposses. The debtor can save those secured assets in a chapter 13 assuming they can make the payments. It gives them a chance to get caught up.

2. A high income filer who probably could pay their debt if it wasn't set at a 32% interest rate may file so that the protection of the bk courts mandate an interest rate and so that the automatic stay prevents them from constant harasment by the creditor.

Not bad, not bad at all!

I fit #1 and more so #2. I hate it when the "promotional" period ends! No more 0% on that $18K line of credit. Anyhow, I just got silly and should have seen the signs. My issue for #1 was that my investment property was not working out as my renters were not paying their rent, then would catch up their rent, then not pay it again! I've sent them a notice to Quit and Vacate. Thank God this will be over, but 5 more years of Chapter 13 payments.

FYI, yes, the investment property was worth saving as it's in North Carolina, and I didn't go all out on it. It has actually appreciated over 15% in the last 2 years.