Question about length of plan vs discharge...

[backwoods]

I have heard it mentioned on this forum several times that a BK13 is required to be between a 3 and 5 year term. The lawyer told us that 5 was the maximum term but he never mentioned a minimum term so that was "news" to me.

Due to some of our creditors not filing claims and our income level we will be 100% paid off after a little over two years.

My question is, what happens when we're paid up? Do we get discharged or will we be required to keep making payments to the trustee for three years even if everyone who filed is paid off?

[justbroke]

I have heard it mentioned on this forum several times that a BK13 is required to be between a 3 and 5 year term. The lawyer told us that 5 was the maximum term but he never mentioned a minimum term so that was "news" to me.

It is really set by whether you're over or under the median income. If you're under the medium, the minimum is 3 years. If you're over the median, the minimum term is 5 years. The maximum term for all plans is 5 years. You could propose a plan less than 3 years (or 5 years) if you propose to pay 100% to the unsecured creditors.

Due to some of our creditors not filing claims and our income level we will be 100% paid off after a little over two years.

That would be AWESOME!

My question is, what happens when we're paid up? Do we get discharged or will we be required to keep making payments to the trustee for three years even if everyone who filed is paid off?

No, if you paid off ALL claims then you are okay to ask for a discharge.

[backwoods]

No, if you paid off ALL claims then you are okay to ask for a discharge.

Thanks that's a tremendous relief!

We are paying 100% of our unsecured as well.

[justbroke]

Thanks that's a tremendous relief!

If you are under wage deduction... make sure your attorney stops them after your last payment in 6/2011! Otherwise, they will keep accepting your money. Then you'd have to wait months for the "audit" to get your money back.

[smkrishna]

Justbroke...Pardon me for asking this silly question again. What do you mean by 100%....I have 3 unsecured debts - 4k with Discover, 18k with Citi, 30k with Chase (HELOC on my investment home). My NDI will be around $100 - $150 per month.

My attorney told me that my payment will be NDI for 60 months (above median income - Ch.13). With what my attorney told me, am I going for 100% plan or not?

[lrprn]

What do you mean by 100%....

When your Ch 13 plan is confirmed, total up all the unsecured debt from every creditor who filed a claim. Your monthly payment first goes to pay your attorney, your trustee's monthly fee, any secured loan payments your trustee is making for you, and priority debts. Whatever is left over after your lawyer and any priority debts are paid in full minus any secured asset payments your trustee is making will eventually go to your unsecured creditors who filed claims.

If your plan pays back everything you owe to all your unsecured creditors in full before your plan ends, then you are in a 100% payback plan.

My attorney told me that my payment will be NDI for 60 months (above median income - Ch.13). With what my attorney told me, am I going for 100% plan or not?

Given the limited information you've shared, there's no way to know what your final payback % to your unsecured creditors will be. This is a great question to ask your lawyer.

Keep in mind that the payback % in Ch 13 doesn't really matter. Read HHM's most excellent sticky thread "% Payback (it doesn't matter)" to understand why - http://www.bkforum.com/showthread.php?t=34708

[smkrishna]

When your Ch 13 plan is confirmed, total up all the unsecured debt from every creditor who filed a claim. Your monthly payment first goes to pay your attorney, your trustee's monthly fee, any secured loan payments your trustee is making for you, and priority debts. Whatever is left over after your lawyer and any priority debts are paid in full minus any secured asset payments your trustee is making will eventually go to your unsecured creditors who filed claims.

Thanks mod for giving such a detailed explanation. I know that Credit Card debts are not secured debts/loans. I let go 2 of my investment homes in foreclosure. Are these loans($190k & $220k) for these homes considered secured debts?

As my DMI is just around $100 and if my attorney fee is $1500 and trustee's monthly fee (I dont know) and secured debts($420k) are so high, then unsecured CC's will not get any thing. Am i right?

If your plan pays back everything you owe to all your unsecured creditors in full before your plan ends, then you are in a 100% payback plan.

Given the limited information you've shared, there's no way to know what your final payback % to your unsecured creditors will be. This is a great question to ask your lawyer.

Keep in mind that the payback % in Ch 13 doesn't really matter. Read HHM's most excellent sticky thread "% Payback (it doesn't matter)" to understand why - http://www.bkforum.com/showthread.php?t=34708

Yes. I read that thread few months back. What he says is NDI is the only thing that matters. Thanks for sharing that link again for me to revise it.