PAYBACK - ON CHAPTER 13 - 3 yrs vs 5 yrs

[Bkq]

We will be filing for Chapter 13 in the next 3-4 weeks. My question is this:

a) Our available disposable for paying on the Chapter 13 - unsecured debt - is about $2,650/month
b) Our total payback on unsecured debt is about $108,000.
c) Therefore, we won't be able to pay it back totally within 3 years.

How does the trustee work this out. In other words, will we be paying for slightly over three years - or - is it 5 years - or - is it somewhere in between?

Thanks!!!!

[minan]

I believe it's either 3 years or 5 years. There's no in-between that I'm aware of.

[jersona]

Yeah, my lawyers told me we are almost ready to file too and it will be around $1600 a month to cover everything, 3 cars, unsecured debt, back taxes. I'm just praying we can make that every month. I'm a little nervous. Add to the fact we still have to get the declaration approved in regards to my mother in laws monies we are holding along with the lien strip on the 2nd. Crossing my fingers....

[LadyInTheRed]

The way I read 11 USC Section 1322(d)(2), if you are under median income, your plan can be anywhere from 36 to 60 months:

(2) If the current monthly income of the debtor and the debtor’s spouse combined, when multiplied by 12, is less than—
(A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $525 per month for each individual in excess of 4,
the plan may not provide for payments over a period that is longer than 3 years, unless the court, for cause, approves a longer period, but the court may not approve a period that is longer than 5 years.

http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00001322----000-.html

[momofthree]

If you are over the median income (guessing you are based on your disposable income) you will automatically be on a 60-month term unless you pay off 100% your debt in full before then. If you're in a 100% payback plan, then as long as the term doesn't go over 60 months, the plan can be any # of months: 12 months, 32 months, 46 months, 53 months, etc. Doesn't matter....

[Bkq]

If you are over the median income (guessing you are based on your disposable income) you will automatically be on a 60-month term unless you pay off 100% your debt in full before then. If you're in a 100% payback plan, then as long as the term doesn't go over 60 months, the plan can be any # of months: 12 months, 32 months, 46 months, 53 months, etc. Doesn't matter....

We are on a 100% payback plan and we are over the median income. Based on what you said above - then - I assume that the trustee will spread the $108,000 we owe on unsecured debt out over 60 months --- which means that even though we have the $2,600 per month in disposable income ---- our monthly payments will be less than our disposable income. Am I correct on this?? Thanks!

[LadyInTheRed]

We are on a 100% payback plan and we are over the median income. Based on what you said above - then - I assume that the trustee will spread the $108,000 we owe on unsecured debt out over 60 months --- which means that even though we have the $2,600 per month in disposable income ---- our monthly payments will be less than our disposable income. Am I correct on this?? Thanks!

I believe you have a choice of presenting a plan with either a lower payment or one that pays all of your DMI over a shorter period of time.

[momofthree]

We are on a 100% payback plan and we are over the median income. Based on what you said above - then - I assume that the trustee will spread the $108,000 we owe on unsecured debt out over 60 months --- which means that even though we have the $2,600 per month in disposable income ---- our monthly payments will be less than our disposable income. Am I correct on this?? Thanks!

This will vary by district. Many districts will still want you to pledge 100% of your DMI each month and pay off the debt sooner. That said, you will probably have more leeway on allowable expenses than someone who isn't in a 100% plan. Your attorney is your best resource for district-specific information. Good luck and keep us posted on your progress!

[Bkq]

This will vary by district. Many districts will still want you to pledge 100% of your DMI each month and pay off the debt sooner. That said, you will probably have more leeway on allowable expenses than someone who isn't in a 100% plan. Your attorney is your best resource for district-specific information. Good luck and keep us posted on your progress!

Thanks! I do have one other question for you:
Question: When we met with our attorney a few weeks ago - he said to stop paying our unsecured creditors -- and --- when they start calling us -- which should be any day now -- that we should refer them to his office. However, I did not ask him as to exactly how I should say this. i.e. ---- Should I tell them that we are filing for bankruptcy and that they should call him --OR -- should I just say that they need to call him and leave the bankruptcy part out of the conversation. Thanks

[jersona]

Thanks! I do have one other question for you:
Question: When we met with our attorney a few weeks ago - he said to stop paying our unsecured creditors -- and --- when they start calling us -- which should be any day now -- that we should refer them to his office. However, I did not ask him as to exactly how I should say this. i.e. ---- Should I tell them that we are filing for bankruptcy and that they should call him --OR -- should I just say that they need to call him and leave the bankruptcy part out of the conversation. Thanks

Our attorneys told us to just have them call the lawfirm and then they can explain it to them. They figure once you file, there's nothing they can do about it anyway. I still get the calls from the unsecured credit card companies, but not as many. I just turn the darn ringer off.....

[momofthree]

No reason not to tell them about the bankruptcy, that way they can flag your account right away and the calls will stop sooner.

[Bkq]

No reason not to tell them about the bankruptcy, that way they can flag your account right away and the calls will stop sooner.

Had one other question:
a) Our attorney asked us to stop paying our unsecured creditors - which we did --starting on August 1st. This is also necessary -- becuase we have to come up with the several thousand dollars to pay the attorney -- which would normally go to the unsecured debts.
b) WE have not filed the Chapter 13 yet -- but -- plan to do so in September.
c) Question: We will have additional funds left over --- this month. Will the Trustee require us to have receipts for anything that we spend the left over funds on?? Thanks!!