Trustee Payment Questions

[StaciMM]

Wondering about things I shouldn't be, but that's me!

How is the trustee's monthly fee determined in a chapter 13? Is it a flat amount determined by where/when you file, or a % of your debt, or something else?

If you had to make a payment of $500/mo to your creditors (assuming a cram down of $15k on 2 vehicles plus 5-10% for your unsecured debts) how much more would the trustee's fee be?

[HHM]

Usually its 10% of the "total" payments you make to the trustee, but I think the percent varies from district to district.

So, in your example, if your chapter 13 plan indicates you will pay $500 per month for 36 months. Your total plan payments are $18,000.00. Thus, the trustee fee would be $1,800.00.

Incidently, you need to factor that in when determining how much your creditors would receive. Thus, under the above plan, you creditors would only receive $16,200

This is why the trustee has an interest in seeing your plan extended beyond 36 months or to increase the payment amount as much as possible and why they go after tax refunds "on top of" the plan.

[StaciMM]

Well, I guess I'm wondering if it would be better to try to get into a chapter 13 plan where I'd pay back $15k or so plus a little interest, plus a fee to the trustee, plus something to unsecured creditors. Or let the 7 finish its course, and figure out what to do with the vehicles in time. (Paying 31k plus moderate interest-one vehicle is 8.9% and the other is 13.75% would certainly be paying MORE, but I'm not officially reaffirming either so a 7 allows me to walk away at any time.)

I think the best financial move to make would be to leave the 7 as it is, buy a used car - instead of making vehicle payments- during the automatic stay and have a lighter budget after discharge. That plan actually wouldn't even get us in trouble. Our expenses would go down by about $1,000 monthly (car payments, and insurance would go down) but DH would have to give up a PT job that brings about $820/mo if we only had one vehicle. We're -$400ish on our petition currently... That plan would leave us about -$220, and if I get a raise before the year is out-we might even break even. Not to mention, DH would get more sleep.

DH is afraid to go to a used car, and to sharing 1. (I think if I could somehow talk my MIL into selling us her 94 Lebaron he might go for that-he knows its history. But she does drive it, and I haven't heard her mention getting a new car & I certainly am NOT going to ask for it.) Its not that our vehicles are in great shape, but the dreaded fear of buying 'someone else's problems' when you buy a used car.

[HHM]

Just keep in mind, even in a chapter 13 cram down on a vehicle, you still have to pay interst.

Also, if you can't show a positive cash flow, you would not qualify for a chapter 13 anyway.