What if I have nothing to pay unsecured creditors in chapter 13

[txeagleair]

I filed for Chapter 13 on Oct 27 and have the 341 meeting on December 15. I am trying to calculate what my monthly payment will be for 5 years. I figure catching up with the mortgage, adminstrative costs and my car payments would run me around $350 a month. Which is right around what Form B22C Chapter 13 calculates as my monthly disposable income. This leaves really nothing for unsecured. Is there a minimum I have to pay to unsecured or is it what is left over? I keep reading the unsecured have to get the amount they would get in Chapter 7 but based on my budget and the Federal guidelines all I can cover is secured. Any thoughts on this?

[Minnymouth]

You didn't say whether you used an attorney or not???

Yes, your unsecured creditors also get so much in a Chapter 13.

You have to submit your plan and have it approved by the Court - not sure when you submit it (before 341 meeting I think).

I tried to do a Chapter 13 and was told no.......

I filed a Chapter 7 first.

Maybe someone on the forum who has done a 13 can help you with this.

Good luck,

Minny

[txeagleair]

Yes, I did use an attorney here in Texas. I am meeting with him tomorrow to work on the payment plan. I told him I may not have much to a pay unsecured and he told me not to worry. Which I am doing anyway. My goal is to keep my house, get back on track with my payments and hopefully in 12 months do a refinance at a better rate. My attorney says its workable.

[Minnymouth]

Good, glad you have an attorney. He will help you set up a fixable plan that hopefully the court will accept.

Let us Know how it goes,

Good luck,

Minny

[StaciMM]

My understanding is that the amount the creditors would get in a 7 = your value in non-exempt assets = the minimum to be paid to unsecured in a 13. I think, though, that even if you have no non-exempt assets, there is probably a minimum % still. It may vary by state, and is probaly something around 5-10%.

[bkfiler]

most often if you cant pay AT LEAST 33%, and most often 43% or more then they wont bother doing a chapter 13. thats how they try to figure out how long you should pay. not really sure it has anything to do with exemptions only. thats used more so in the way that they take anything that is not exempt and sell it and distribute it to the creditors and then take the disposable income and send it as well.

well, this is how the motions to dismiss always state it when first proposed by the US Trustee. Afterwards i have no idea because i dont read those cases.

i'm only interested in the plan that gives them zilch... i got that attitude from capital one (whats in my wallet!) hehe

[Minnymouth]

bkfiler,
I love the attitude "whats in my wallet" -
NOW ME - I want to know how much THEY HAVE IN THEIR WALLETS - as I'm getting ready to lighten their load...

Minny

[losing_it]

most often if you cant pay AT LEAST 33%, and most often 43% or more then they wont bother doing a chapter 13. thats how they try to figure out how long you should pay. not really sure it has anything to do with exemptions only. thats used more so in the way that they take anything that is not exempt and sell it and distribute it to the creditors and then take the disposable income and send it as well.

well, this is how the motions to dismiss always state it when first proposed by the US Trustee. Afterwards i have no idea because i dont read those cases.

i'm only interested in the plan that gives them zilch... i got that attitude from capital one (whats in my wallet!) hehe

So in my situation with $47,000 in debt, if I tried 13 instead of 7, I would pay lets say 43% which is $20,210. Now do I take this and divide it by 5 yrs of monthly pymnts (60)? $20,210/60 = $336
Am I understanding this correctly?

And if this is how a ch. 13 would work, what happens to the remaining debt at the end of 5 years?

[StaciMM]

To answer the last question first, the remaining balance is discharged.

Now, how you arrive at the monthly payment and how much goes to the creditors kind of works in reverse of how you're thinking.

First you consider your monthly income and monthly living expenses. If your income is $2500/mo and expenses are $2175, then you have $325 remaining. That is what goes into the BK plan. That doesn't all go to debt, however. The trustee gets a %. I believe the % is set by the district/state and I believe it varies between 5-10%. Part might cover an attorney fee, some require partial payment upront and the rest goes into the plan. I don't know if the attorney's fee gets priority or if it is treated as an unsecured debt though.

Certain kinds of debts get priority, meaning they get paid first. I don't know the full pecking order, but unsecured debts (credit cards, etc.) are the bottom of the list. Past due balances on secured property rank higher, and if the plan includes IRS payments they probably rate pretty well also.

Lets say that of that $325, $25/mo goes to the trustee and the attorney was already paid in full. (Makes it an easier scenario, LOL.) If you have $10,000 in priority (past due secured payments, IRS, etc.) debt then $8000 would go to your unsecured creditors. ($300 monthly payment after trustee fee is deducted, X 60 months = $18000, less $10000.)

If you have assets that are not exempt, that creates a minimum amount you need to pay to unsecured creditors in order to meet the terms of a ch. 13. So, if you have $15000 in house equity but are only allowed to have $5000-and all your other assets are exempt-then at least $10000 needs to go to the unsecured creditors. In the scenario above, you'd need to be able to cut some expenses to get your total plan payment up.

So in my situation with $47,000 in debt, if I tried 13 instead of 7, I would pay lets say 43% which is $20,210. Now do I take this and divide it by 5 yrs of monthly pymnts (60)? $20,210/60 = $336
Am I understanding this correctly?

And if this is how a ch. 13 would work, what happens to the remaining debt at the end of 5 years?

[losing_it]

Heck I wish I did make $2500 per month. lol.

After taxes and ins, if I have a job making $12 an hour, my income would be about $480 per week then I have to subtract taxes and ins, social sec, and medicare. I usually plan 77% of my check when I budget. So $480x77% = $369. $369x4 weeks = $1476 per month.
Now with $600 for mortgage and lets say utilities, eating and gas $550 - This would total $1150. I would have $326 left over. There may be some weeks that I would work some overtime but I'm just playing it safe with 40 hr work weeks.
So then I should qualify for Ch 13 BK without anyone touching my $5000 harley and $15,000 to $20,000 in equity right? Thats how I'm understanding the Ch. 13 BK. If the pymnt needs to be $350 I'm sure I can find some corners to cut.

Oh, and the CC's I've listed is my only debt. All unsecured. I have no other loans than my mortgage.

[bkfiler]

depending on wether stacii was holding a glass of wine while typing all that wisdom.... (hehe )

...i would go look chapt 13's up in pacer and read them. you will learn a lot. its not easy and all trustees do it differently it seems.

[losing_it]

depending on wether stacii was holding a glass of wine while typing all that wisdom.... (hehe )

...i would go look chapt 13's up in pacer and read them. you will learn a lot. its not easy and all trustees do it differently it seems.

LOL
ya I sure could use a glass or 2 myself right now, but I can't risk showing up at the interview with red eyes. I need my mental edge too so I can sell myself and remember everything to say.

[Genenco]

LOL
ya I sure could use a glass or 2 myself right now, but I can't risk showing up at the interview with red eyes. I need my mental edge too so I can sell myself and remember everything to say.

I'm not too sure, but the trustee may demand (And get it) that you sell the harley...After all, they will be looking for ANY $$$ to take and pay against the Ch 13...And even making you do a refi to get ahold of that equity.

However, a lawyer can better explain.

Then, a drink afterwards might be ok

[StaciMM]

Based on the #'s you gave, your monthly income for the petition (take home) would be $1599. ($369*52/12) In your expenses, you will need to also account for vehicle maintenance/insurance and any other living expenses. (Occasion things like clothing, eye glasses, hair cuts, etc.) Using an extreme budget to start the 13 isn't a good idea-you may be able to live off of ramen noodles and pb&j for a couple of months, but its not realistic to plan to do that for 5 years.

Sounds like your non-exempt assets are about $20,000. ($20,000 equity in house less $5000 exemption and $5000 bike.) If you have no priority debts then all of your payment-after the trustee share and lawyer, if applicable-will go to your creditors. That works out to about $333/mo for the debt alone.

You're correct in thinking that your assets are safe in a 13. You keep them, and they determine the bare minimum that needs to be paid back.

One thing I've thought of, and this is probably something for an attorney to answer... If someone files a ch. 7, and has equity in their home, the cost of selling the house is considered. I don't know if you'd be able to deduct that from what you had to pay back in a 13. (Logic being that if the trustee took your house & sold it, he'd have to pay the mortgage off, give you your exeption, AND pay the realtor/legal fees associated with selling it. What remains gets paid to the creditors, w/ the trustee keeping a fee.) It could be argued that if you filed ch. 7 w/ your $15,000 in non exempt home equity, $3000-5000 would go to selling costs, leaving only $10,000-12,000. I don't know if they consider that in a 13 though.)

Heck I wish I did make $2500 per month. lol.

After taxes and ins, if I have a job making $12 an hour, my income would be about $480 per week then I have to subtract taxes and ins, social sec, and medicare. I usually plan 77% of my check when I budget. So $480x77% = $369. $369x4 weeks = $1476 per month.
Now with $600 for mortgage and lets say utilities, eating and gas $550 - This would total $1150. I would have $326 left over. There may be some weeks that I would work some overtime but I'm just playing it safe with 40 hr work weeks.
So then I should qualify for Ch 13 BK without anyone touching my $5000 harley and $15,000 to $20,000 in equity right? Thats how I'm understanding the Ch. 13 BK. If the pymnt needs to be $350 I'm sure I can find some corners to cut.

Oh, and the CC's I've listed is my only debt. All unsecured. I have no other loans than my mortgage.

[StaciMM]

I don't drink wine, blech! I ONLY drink a few specific mixed drinks, some wine coolers, and a few flavored bottled drinks. (Like Mike's Hard Lime or Cranberry Lemonade, I also like Smirnoff's Twisted Watermelon.)

depending on wether stacii was holding a glass of wine while typing all that wisdom.... (hehe )

...i would go look chapt 13's up in pacer and read them. you will learn a lot. its not easy and all trustees do it differently it seems.