CH 13 Payment Plans - Is there an applicable interest rate?

[markinva]

Looks like it's certain that I will be in a 100% plan, 5 yrs. All unsecured debt, except for a student loan that I do not yet know if it will be included in the Plan payments. In addition to DMI, does the court factor in an interest rate to arrive at my total monthly payment? Thanks

[LadyInTheRed]

Your unsecured creditors do not get interest on the debt for any time after your filing date. The trustee gets a commission from what they distribute to creditors, but that comes out of your plan payment. It is not added on top of it. If your DMI is not enough to pay 100% to creditors and still pay the trustee fee, you would not be in a 100% plan.

[markinva]

Thanks for the fast reply! Good to know that my Chap 13 can also be thought of as a 0%, 60 month loan! At the end, I will have savings and be totally debt-free! Where else could I get such a deal!

[toojerm]

If my math is right, The trustee fee is definitely on top of my 100% payback. My final repayment will be $7300 above my claims plus lawyer fee. Plus, it shouldn't be a percent, but a simple fee. Why do I pay the trustee more than someone with less debt? It takes no more effort to cut a large check than a little one. The trustee has taken 6.6% of all money paid into the plan so far, but the percentage taken per payment has gone down.

[toojerm]

In my next life, I want to be a cold hearted, inflexible, stonewalling trustee.

[LadyInTheRed]

If my math is right, The trustee fee is definitely on top of my 100% payback. My final repayment will be $7300 above my claims plus lawyer fee.

If you are in a 100% payback, your total payment will be more than 100% of your debt. Your DMI must be high enough to cover 100%, plus trustee and attroney fees. If it's not, you should not be in a 100% plan.

Plus, it shouldn't be a percent, but a simple fee. Why do I pay the trustee more than someone with less debt? It takes no more effort to cut a large check than a little one. The trustee has taken 6.6% of all money paid into the plan so far, but the percentage taken per payment has gone down.

It's a percentage. Whether it should be or not is something that could be debated. The trustee will be cutting more than one check to each creditor. The work the trustee puts into your case is more than just cutting checks. Most of the work is at the beginning. The amount of work a trustee puts into a case is really going to vary and probably has little to do with the amount of the plan payment. The percentage may be going down because the total annual salary of a trustee is capped. The trustee is probably reaching that cap, so has to reduce the percentage fee.

The percentage issue reminds me of court filing fees for California probate cases. A few years ago, the legislature passed a graduated fee based on the value of an estate. So, a more valuable estate will pay a higher fee. This method was eventually struck down by the courts as a tax that wasn't passed under the more stringent requirements to pass tax legislation. While the case was pending, I was at a lunch attended by staff at our local probate court. One of the senior staff members of the court said that the graduated fee made no sense because it is the less valuable cases that tend to take more of the court's time.

In my next life, I want to be a cold hearted, inflexible, stonewalling trustee.

LOL! I think I'd rather be an independently wealthy attorney who can afford to work pro bono to fight the trustees without worrying about whether the amount at issue is financially worth the fight.