What causes a 100% payback plan?

[nsupanda]

I know this is a very vague question... but can someone tell me, in general, what causes someone to be in a 100% payback plan?

I'm fixing to go see an attorney to file for chapter 13. I can't afford the minimum payments now, what makes them think I will be able to afford it if I'm in 100% payback?

(nobody has told me I'll be in 100% payback, but considering my luck, I will be...)

Thanks!

[LadyInTheRed]

If your disposible monthly income over the life of your Chap 13 plan (36 or 60 months) equals or exceeds your debt (after subtracting trustee fees and any attorney fees paid in your plan), you will be in a 100% payback.

That's probably an oversimplification if you have non-exempt assets as the value of non-exempt assets may also come into play.

[forgotten]

I can't afford the minimum payments now, what makes them think I will be able to afford it if I'm in 100% payback?

Lady's answer was perfect, but a note on that comment...

If you owe $80,000 @ 30% default interest your minimum payment would be about ~$3600/mo ($2000 interest + 2% of the balance).

In a chatper 13 the payment at 100% would be ~$1412/mo ($80k/60 + 6% trustee fee).

So, since interest is stopped and you pay over 5 years you very well could afford a 100% plan when you can't afford the minimum payment.

[lrprn]

Another thing that can cause a 100% payback is if all your creditors do not file claims. (We actually had one member a while ago who did not have a single creditor file a claim - extremely rare!)

Any time a creditor does not file a claim within the allowed time frame (and some don't), then you don't owe that creditor a dime. You owe less overall, so that's another way how you can end up paying back 100% to all the creditors who do file claims even though you can't afford to pay all your creditors now.

[nsupanda]

Thanks for the info. Right now, my minimum payment is $1250/month if you add them all together. I can really only afford $800/month at the most (and that's cutting back some of my luxury expenses - dish network, cell phone, internet, etc...). There is no way I would be able to afford paying the $1250/month if the Trustee says that is what I must pay.

I haven't even seen a lawyer yet (still getting paperwork together) so I know I'm just being paranoid right now. It's just driving me crazy because, unless I win the lottery, bankruptcy is my only way out.

[flyinbroke]

Well, how much you pay back will depend on what your take home is and what exemptions you have. I am looking at close to 100 percent payback which is not much less than what I was paying before though I am visiting other attorneys because the online means testing is giving me a much lower number for disposable income. (I will say, from my perspective, that you are screwed if you make a decent amount of cash and don't have kids and/or a house with regards to means testing.)

On a lighter note, it makes me realize how wealthy I would be if I owed nothing.

[forgotten]

If it makes you feel any better, my combined minumum credit card payments were over $5000 and my trustee payment is $950.

Its all about what your disposible income is calculated at.

[NoTomatoCan]

I will say, from my perspective, that you are screwed if you make a decent amount of cash and don't have kids and/or a house with regards to means testing.

This is SO true! My wife is pregnant (we are just about to file) and our proposed payment will drop by around $1200 per month once the baby is born. Yes, we will have a lot of additional expenses, but I would rather see those funds going to legitimate expenses than to the trustee.

[nsupanda]

I will say, from my perspective, that you are screwed if you make a decent amount of cash and don't have kids and/or a house with regards to means testing.

I rent my house, does that count?

[flyinbroke]

Nope, renters are stuck with a much lower number for the IRS guidelines as far as means testing. I think you can claim the rent in its entirety (though I wonder, since I will be paying about 700 more than the "median", but my disposable came to about that much more than online means testing for disposable income.) I have to pay to do my own carpeting, to change refrig water filters and other maint activities. It would seem that it automatically fills in a zero for maint costs, because I rent. I am hoping that I can.

[nsupanda]

Nope, renters are stuck with a much lower number for the IRS guidelines as far as means testing. I think you can claim the rent in its entirety (though I wonder, since I will be paying about 700 more than the "median", but my disposable came to about that much more than online means testing for disposable income.) I have to pay to do my own carpeting, to change refrig water filters and other maint activities. It would seem that it automatically fills in a zero for maint costs, because I rent. I am hoping that I can.

I'm in a special situation. My mom owns my house and we have a rental agreement. The agreement states that I am responsible for all repairs/maintenance. The reason for this is because the agreement also states that after 30 years, the house's ownership will be transferred to me and my husband. So, I guess it's sort of like a "rent-to-own" thing. Crazy, I know... but that's how she wanted it.

[flyinbroke]

You may have a whole 'nother situation then and I know little about real estate law and how it will apply to a BK.

Bottom line: your percentage is based on income-allowable expenses. Too much disposable=high percent payback. And as someone pointed out, not all creditors respond in time which means others get even more up to 100 percent (but I hear that you can finish early that way too...)

[Lissy]

I am getting ready to file Chapter 13 next week and I think I am going to be very close to 100% payback, if not 100%. My attorney initially calculated my monthly payment at $1200, which I know I couldn't afford. BUT I went through my draft petition with a fine tooth comb and found that they understated the taxes withheld from my paychecks by almost $400/month. That drops my disposable income by the same amount, so I'm hoping for a much lower payment once the changes are made. Check everything they give you!! You don't have to be a lawyer to figure it out, it's simple math. My lawyer just told me to check that all of my income/expenses were accounted for and that all of my creditors were listed. If I had just done that, and not checked the calculations, I would never have caught this and I would have been stuck with a plan I couldn't afford and doomed to fail. Good luck!