Does unsecured debt affect your payment if you max out on Dmi?

[eltaur2000]

My question is if the amount of unsecured debt really impacts amount of payment?

Considering....

DMI is about $600

I owe 47k unsecured. (Minimum Payment 2% $940 month)

7k Secured (160 a month)

32k in Student Loans (200 Month)

[mountanddo]

I'm not sure what you are asking. Your DMI is your DMI. It is your income-allowable expenses. There is no minimum or maximum. The amount of your unsecured credit should not affect what your payment is. Of course if you are in a 100% payback plan that may be different as I know nothing about those. You might want to try to word your questions as questions rather than listing off bullet points. You might get better responses.

[momofthree]

If your accurate DMI is $600, then your payment will be $600/mo.

When calculating your dmi are you counting your student loans as an expense? If you are including them as an expense, then your dmi, and therefore your payment, will actually be $800 because SL are not an allowable expense.

[eltaur2000]

I'm not including the SL as a monthly expense I'm assuming it's part of the payment plan correct?

[mountanddo]

I think what she is saying is that SL are not allowed to be part of the plan and are not dischargable. You will need to pay the $600/dmi + the $200 for your student loans. In the end you will be paying the whole 32k for your student loans. *someone correct me if this is not right.

[eltaur2000]

I understand they wont be discharged but the $200 a month reduces my DMI correct? So if my DMI is $600 after I have reduced the $200 month as an allowable expense correct?

[momofthree]

I think what she is saying is that SL are not allowed to be part of the plan and are not dischargable. You will need to pay the $600/dmi + the $200 for your student loans. In the end you will be paying the whole 32k for your student loans. *someone correct me if this is not right.

Yes, and no. The student loans are non-dischargeable and debtor will be fully responsible for them after the ch.13 closes. However, they go into forebearance (no payments) during an active bankruptcy and the payment therefore is not an allowable expense. Depending on how the OP calculated his DMI, this could alter his calculated payment. I believe (and I could be wrong), that SL are paid at the same rate as other unsecured creditors.

[momofthree]

I understand they wont be discharged but the $200 a month reduces my DMI correct? So if my DMI is $600 after I have reduced the $200 month as an allowable expense correct?

No, student loans are not an allowable expense, they do not reduce your dmi.

[eltaur2000]

If they do not reduce my DMI then are included in Chap 13 payment? If not then were is money suppose to come from? If it's not reduced from my DMI and it's not included in my payment. Then were am I suppose to get this extra money to pay for this?

[eltaur2000]

Or does it work like this....

Let's say my DMI is $600.

$200 will go to the SL and the rest to my un secured debts?

[eltaur2000]

If not im confused as to were am I suppose to find the $200 to pay this with?

[momofthree]

Student loans do not get paid while you are in an active ch.13 bk. They go into forebearance (even if you have used up all your deferment time) during bankruptcy. That money that you were paying towards your student loans will be dmi and will be distributed to your unsecured creditors.

[eltaur2000]

Gotcha that makes perfect sense

[mountanddo]

I'm curious...are you not allowed to pay any money towards student loans during your bankrupcy? I mean if they could squeeze out $25 or $50 every once in awhile to put towards the balance. It probably doesn't make much sense to do that as you should probably put that in an emergency fund but was just curious if that was allowed.

[lrprn]

How student loans are treated on your plan is trustee-and local-court dependent. Some very lucky 13 filers are in local courts that allow student loans to be included in expenses (at least the interest). Others (like ours) consider the student loan lender to be non-secured and pay the student loan lender the same payback % as the rest of the non-secured creditors get. Unfortunately as already explained, because the loans go into forbearance for the life of your plan, most local courts don't allow the student loan payment to be included as an expense when filing. This increases your DMI.

The worst consequence of the court denying that student loans are a legitimate expenses is that unless you can free up enough to pay on your student loan throughout the life of your plan, for three or five l-o-n-g years, the interest compounds while no payments are made.

Private student loan lenders got the ear (and I'm pretty sure the pocketbooks too) of the 2005 Congress who pushed this change through in the last bk law change six years ago this month. It's unfair with a tremendously negative impact to anyone who files Ch 13 (it doesn't impact Ch 7 filers much at all since their cases are discharged within 90-120 days), but it's the law.

This is why some more lenient courts understand the need to at a minimum pay the interest off on these loans through regular trustee disbursements inside the Ch 13 plan. I'm sorry for you if you are in one of the "Scrooge" courts that force you to come out of a five-year Ch 13 plan successfully but owe signifantly more on your student loans than when you went in. That's NOT a fresh start.