California Chapter 13 percentages

[Crozier]

I just spoke to an attorney who said he could argue for 25 cents on the dollar, in court. He claimed that the court has been lienient, and for some reason, 25 cents on the dollar is not challenged, in terms of unsecured loan repayment.

I know he may be blowing smoke, however, if several Reg 16 (California) filers are experiencing the same thing, it may be a trend. Just curious if this could be the case.

HHM don't beat me up for asking, I am just curious.

[walkthaplank]

Your payback percentage is based on your DMI. You need to have enough DMI to fund a plan, beyond that there is no real minimum payback beyond what they would get from a CH7 filing. If you have the DMI for more than 25% the trustee will fight for it.

[Crozier]

I agree, and I understand that. What I am looking for is filers who are currently on payment plans, just to see if the are paying a percentage in the 25% ballpark or more. I realize it is based on DMI, however, there could be a trend. Then again, maybe not.

[justbroke]

I agree, and I understand that. What I am looking for is filers who are currently on payment plans, just to see if the are paying a percentage in the 25% ballpark or more. I realize it is based on DMI, however, there could be a trend. Then again, maybe not.

I'm utterly confused. There is no way, in a Chapter 13, that a lawyer can have you pay less than your disposable monthly income. It's not a negotiation.

Now, if he's talking just pure negotiating the debt outside any Bankruptcy proceedings (and the debtor is not in Bankruptcy)... that is different.

I'd go back to that lawyer and ask specifics. Ask him if you had $1,500 DMI and only $20K in debt... how is he going to get you paying only $5K of that debt and not 100% over the duration of your.

I just don't see it.

If you have the DMI for more than 25% the trustee will fight for it.

It's not even a fight. The Judge can only confirm a Plan that commits your DMI as well.

[kornellred]

It just so happens that the 25% figure can serve as a valid estimate when dealing with Chapter 13 payments to unsecured creditors. The "system" is calibrated (so to speak) in such a fashion as to guarantee that lenders do not take too much of a thrasing, as was the case before the 2005 Bankruptcy Code Revisions.

Of course, the payback figure in terms of percentage is essentially meaningless to begin with.

[justbroke]

[QUOTE=kornellred;314060]It just so happens that the 25% figure can serve as a valid estimate when dealing with Chapter 13 payments to unsecured creditors. The "system" is calibrated (so to speak) in such a fashion as to guarantee that lenders do not take too much of a thrasing, as was the case before the 2005 Bankruptcy Code Revisions.[/QUOTE}Calibrated? Valid estimate? To whom does this estimate apply? Me? (I'm paying 0%) How about the Johnsons (paying 100%)?

The new BAPCPA code is exactly designed to maximize the benefit to the unsecured creditors. Back in pre-BAPCPA it was common to propose payments in a Plan (of Reorganization) that were some sort of negotiation. The new code changed all of that and made the payments mechanical. So, I don't even know where this 25% figure comes from. I have never heard such in several hundred (> 300) actual Chapter 13 cases I have reviewed.

Because the mechanical test is based on a technical formula, I don't see where a blanket 25% statement (or any other percentage) can be made. A Chapter 13 Plan of Reorganization is subjective.

I would never want to perpetuate this (myth) either.

Of course, the payback figure in terms of percentage is essentially meaningless to begin with.

True, because it fluctuates and is based on your disposable monthly income as well as the allowed unsecured claims.

[Crozier]

Thanks for the info. Honestly, my intention was not to start an argument. However, after interviewing 6 attorneys and getting six different responses and six different plans of action, I thought I should throw it out there to see what the forum thought. As expected, I learned something again. Thanks for all the input.

[justbroke]

Thanks for the info. Honestly, my intention was not to start an argument.

No argument. I think some attorneys and even folks who do some research, concentrate on pre-BAPCPA law (aka "old" law). Just as we keep hearing that attorneys are telling people that they can buy out of a post-BAPCPA (new law) Chapter 13 early. Yet we have not one case to reference.

I like that you posted this information. It helps others evaluate attorneys. As you point out, even amongst the attorneys the strategies, reasoning, and plans vary greatly.