Chpt. 13 question.....

[Crystal5]

Most of our debt is Secured. About 90,000. If we file for BK, I guess it would be chpt.13, after we make the required payments, whether 3 or 5 years, if those payments total say, 40,000. what happens to the remaining 50,000?

Hope this makes sense.

In otherwords, if our disposable income only totals about half of totaled debts. What happens to the leftover amount.

How does it work with your house and car.

Our first mort. is about 77,000.
Our second mort. is about 10,000.
Our auto is about 10,000. The value is less than owed.

We maybe have 5,000 to 10,000 in equity in our home.

The only other assets is a small pickup truck, that is paid for and the value is maybe 1,200.00. It is pretty old.

Thanks for any info.

[SinkingFast]

Secureds could either be paid thru the plan or direct by you. If you're in arrears on your mortgage or auto loan, most likely those payments would be paid thru the plan.

Your plan payments would take any disposable income you have to pay off the remainder you owe your attny first. Then next comes the Secureds if you have any arrears there.

At the end of your plan, all your remaining unsecured debt would be discharged and you'd go back to paying your Secureds as normal, if you still owe anything.

Ch 13 will not discharge any debt remaining on loans to Secureds like your home or your autos once you complete the plan payments.

[Crystal5]

So during the plan I might only pay half of what my payments are now and after the plan it would go back to the regular payments.

What happens to the interest on those secured loans?

Thanks

[SinkingFast]

If the Court decides you need to make your payments thru the Plan, then you'll pay to the Court what you pay in payments now PLUS your disposable income.

Example,......... Extremely simplified for example purposes.

Say you pay $1K/mo house payments and have missed 2 payments prior to filing Ch 13. You're in arrears to your mortgage Lender $2K.

Say your car payment is $250/mo and you're 2 months late on the auto loan. You owe $500 in arrears to the auto loan Lender.

Your disposable income is $500/mo.

Because of the arrears, the Court says you'll have to pay your Mortgage and Auto Loan in the plan for the duration of your Ch 13.

Your Ch 13 plan payment would be $1K house + $250 car + $500 disposable income, or $1750/mo.

Your attny charges $2500 to file a Ch 13. You pay $1K plus filing fee up front and $1500 goes into the plan.

Your disposable income will first go to pay your attny the remainder of what you owe. Then any arrears you may have on your Secureds. Unsecureds are dead last. The Court continues to make your regular house and car payments on your behalf while you're in the plan.

Once you complete your plan, you're all caught up with your Secureds. Maybe even paid off, if you have an auto loan in the plan. Any remaining debt to Unsecureds gets discharged.