% Payback question

[Lissy]

So I read the sticky thread about % of payback and how it doesn't matter. However, the letter that came from my atty with my draft petition originally stated that we were proposing $1200 per month and a payback of 80%. It went on to say that I would pay only 80% of those that file a claim. This confused me. I am doing a 5-year plan, so my understanding was that I have to make the monthly payments for 60 months. I know that I can finish early if I end up paying back 100% before that time. But if I get to 80% before the 60 months is up, that wouldn't end my plan early, would it? Maybe I misunderstood, but that is how I read that statement and just wanted to get clarification. TIA!

[justbroke]

But if I get to 80% before the 60 months is up, that wouldn't end my plan early, would it? Maybe I misunderstood, but that is how I read that statement and just wanted to get clarification. TIA!

Show answer... No. Your Plan actually will read that you promise to submit all disposable income to the custody and control for the Trustee for the duration of the Plan. So, that means you just keep paying and the allowed unsecured claims will continue to be paid until the 60 months are up, or you pay them back 100%... whichever comes first.

On another issue, I don't agree with your attorney. The 80% number comes from your "projected disposable income" based on your scheduled unsecured debt. If all of the creditors don't file (or their claims are disallowed), the percentage will go up.

Example: When you file, you schedule $100K in unsecured debt. Your projected disposable income is $80,000 over 60 months. That means a "projected" 80% payback. However, only $80K worth of them file an allowed claim. Now you're in a 100% payback plan. Your disposable income doesn't magically go down to $64K, as you suggest in your posting (to make it 80%). Your disposable income stays at $80K and is used to payoff the secured creditors. Remember, the unsecured creditors get a pro rata share of the pool (projected disposable income)... not a pre-calculated percentage based on the submitted plan.

Just my thoughts.