Having extra $ in the bank when starting a 100% pay back

[greenthinker]

Hi All,

We are getting ready to file for Ch 13, and based on my income there is no question that the plan will be to pay back 100%. That being the case, I am assuming that we will be able to keep any extra money that we have in the bank over and above the plan payment amount as a cushion for emergencies. Or, will the trustee require us to pay any extra money that we have up front?

Thanks!

[jetsfan2010]

why would you keep the money in the bank?

[greenthinker]

Why wouldn't I? Why would I not want to have some money in the bank for emergencies? Sorry, but I don't understand where you're coming from.

[momofthree]

Yes, in a 100% payback plan, you can pretty much have unlimited funds in the bank. No worries! It's definitely a good idea to have an emergency fund from the get-go.

[jetsfan2010]

Why wouldn't I? Why would I not want to have some money in the bank for emergencies? Sorry, but I don't understand where you're coming from.

Sorry green thinker, I misread your original post. I was assuming you were asking about leaving $$ but it wasnt a 100 percent payback.

[greenthinker]

Thanks, momofthree. That's what I thought, but it is good to hear it from someone else.

[newbie2]

A good rule of thumb is this: If you have $20,000 that you can't exempt, then you have to pay in at least $20,000 to your unsecured creditors over the life of the plan.

[Pandora]

The $ in the bank will / can be taken by the trustee if you cannot exempt ALL of it...regardless if you will be in a 100% plan or not. It will work like this: Using newbie2's example, let's say you have 20K in the bank...and can only exempt 10K of it... that means the other 10K can be dealt with as follows:

1. Trustee takes it upfront, and shortens your plan time since you will be in a 100% plan

OR

2. Trustee leaves it, but in order to do so, you have to pay it back into your plan (Ch. 7 liq. test)

One way or the other, unless you can totally exempt that $...you'll be paying for it somehow..some way. As momofthree stated however, once confirmed (if at 100% to unsecured creditors) then anything over and above your plan payment should be yours to keep.

[forgotten]

Actually, The debtor's plan must satisfy the "liquidation test", i.e., the plan must propose to pay creditors at least as much as they would have received in a Chapter 7 proceeding and administrable assets were liquidated by a bankruptcy trustee to pay the claims of creditors.
If you had property or cash above and beyond all liens, leases, and available exemptions, worth $10,000. Your Chapter 13 plan must propose to pay creditors at least $10,000 over its duration.

If you are in a 100% plan the courts usually are much more forgiving and will allow you to keep most/all non-exempt property, and not have to pay it in to shorten to the plan.

[greenthinker]

Thanks everyone for your great responses. The amount that we would expect to have in the bank would be far less than $10K...probably $3K - $5K. And yes, our plan would easily satisfy the liquidation test. So, given those facts, it sounds like we would be able to keep that amount in the bank.