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I have a few questions about ch. 13

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  • I have a few questions about ch. 13

    Can someone tell me the pros and cons to filing ch. 13? Do you end up paying ALL of your creditors back basically but over a 3-5 year plan??? Can't you just try and do this with them on your own without filing? I am just trying to figure it out. Thanks!!

  • #2
    There are a couple types of Chap 13 filing. 100% payback and less than 100% payback. I can only give you the pros on the 100% payback. I actually planned to start payment plans with all my CCs on my own as you mentioned. Then one day someone knocked on my door. It was an employee from a predatory loan company that I owed. He said he was there to inspect my assets and that they would soon be filing a lien. I was so spooked by that visit (who does that anymore. Knock on peoples doors to collect) that I filed for BK the very next week.

    So the pros for me filing was to avoid being sued, liens against my home, late fees and interest. Also after you file there is an automatic stay in place. Companies can't contact or call you. It gives you time to breath and regroup.

    Although I had stopped making payments on the predatory loan, I had never missed a CC payment. I might have been late. But never missed. So the cons would be I lost all my CCs. Credit rating is shot. For the next 5 years my every move financially will be scrutinized etc. You have to get trustee permission for nearly everything. Including selling our home.

    Even with all that I am glad I filed.





    Comment


    • #3
      Originally posted by lisa9519 View Post
      There are a couple types of Chap 13 filing. 100% payback and less than 100% payback. I can only give you the pros on the 100% payback. I actually planned to start payment plans with all my CCs on my own as you mentioned. Then one day someone knocked on my door. It was an employee from a predatory loan company that I owed. He said he was there to inspect my assets and that they would soon be filing a lien. I was so spooked by that visit (who does that anymore. Knock on peoples doors to collect) that I filed for BK the very next week.

      So the pros for me filing was to avoid being sued, liens against my home, late fees and interest. Also after you file there is an automatic stay in place. Companies can't contact or call you. It gives you time to breath and regroup.

      Although I had stopped making payments on the predatory loan, I had never missed a CC payment. I might have been late. But never missed. So the cons would be I lost all my CCs. Credit rating is shot. For the next 5 years my every move financially will be scrutinized etc. You have to get trustee permission for nearly everything. Including selling our home.

      Even with all that I am glad I filed.




      Thank you so much!! I bet that was scary. That would freak me out too.

      Comment


      • #4
        The first main "pro" of Ch 13 is that you pay remaining disposable income ($$ remaining after living expenses) to all your debt with no interest (except for the interest that a creditor will claim you own up until your filing date). So instead of paying a monthly payment based on the creditors terms, you pay with leftover $$, so you should see a reduced payment to unsecured creditors and very likely a significantly reduced payment. Secured creditors will get paid in full first from your monthly payment, while unsecureds get paid what's left. The second main "pro" is that you keep your assets (house, car, other property).

        Depending on who files a Proofs of Claim, you may pay back all your unsecured creditors or you may only pay back some of them. If some don't file POCs you may find yourself with less debt and may be able to pay them at 100% and complete your BK sooner. Not every creditor files a POC. In my case I had two unsecureds who held half of my debt and did not file POCs. Lucky me.

        Three cons: If you pay back less than 100%, you will payback on a three year or five year plan, depending on your income established by the Means Test. The second "con" is that you may be on a tight budget for the years you are in Ch 13 and will have to save $$ to meet contingencies and emergencies that arise, or just something as regular as buying Xmas or birthday gifts for people. Trustees don't regard gift expenses as living expenses. The third is that a majority of Ch 13s fail (get dismissed). A debtor may stop making plan payments because they may lose a job, a major expense comes up after filing, they fail to budget properly or they plan underestimated living expenses. Some of these things can get fixed with a plan modification that would be reviewed by the trustee and approved by the BK Court and you can get a lower payment to help you complete your Ch 13 plan.
        Last edited by switch625; 08-23-2017, 11:15 AM.

        Comment


        • #5
          Originally posted by lisa9519 View Post
          For the next 5 years my every move financially will be scrutinized etc. You have to get trustee permission for nearly everything. Including selling our home.
          lisa9519, I think you just recently filed, right? You will learn that your every financial move is not scrutinized. Most scrutiny is at the beginning, before confirmation. Once you are confirmed you will go about your life and rarely hear from your trustee. Yes, you have to get approval to sell major assets or incur new debt. That is hardly "nearly everything". Depending on your trustee, you may have to send copies of your tax returns every year. During my 5 year plan, the only time I heard from my trustee was once a year when she reported to me how she has managed disbursed my plan payments and then after I made my last payments when she sent me forms to complete, sign and send to my attorney.

          RollTide, in a Chap 13 you pay only your disposable income instead of what the creditors decide they will accept. You may not get all creditors to agree to accept reduced payments. Even if they do all initially agree, any one of them can change their mind at any time and suddenly file a lawsuit. With a Chap 13, you take control away from the creditors.

          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


          • lisa9519
            lisa9519 commented
            Editing a comment
            Thank you! Makes me feel a lot better. And yes I just recently filed.

        • #6
          Originally posted by switch625 View Post
          The first main "pro" of Ch 13 is that you pay remaining disposable income ($$ remaining after living expenses) to all your debt with no interest (except for the interest that a creditor will claim you own up until your filing date). So instead of paying a monthly payment based on the creditors terms, you pay with leftover $$, so you should see a reduced payment to unsecured creditors and very likely a significantly reduced payment. Secured creditors will get paid in full first from your monthly payment, while unsecureds get paid what's left. The second main "pro" is that you keep your assets (house, car, other property).

          Depending on who files a Proofs of Claim, you may pay back all your unsecured creditors or you may only pay back some of them. If some don't file POCs you may find yourself with less debt and may be able to pay them at 100% and complete your BK sooner. Not every creditor files a POC. In my case I had two unsecureds who held half of my debt and did not file POCs. Lucky me.

          Three cons: If you pay back less than 100%, you will payback on a three year or five year plan, depending on your income established by the Means Test. The second "con" is that you may be on a tight budget for the years you are in Ch 13 and will have to save $$ to meet contingencies and emergencies that arise, or just something as regular as buying Xmas or birthday gifts for people. Trustees don't regard gift expenses as living expenses. The third is that a majority of Ch 13s fail (get dismissed). A debtor may stop making plan payments because they may lose a job, a major expense comes up after filing, they fail to budget properly or they plan underestimated living expenses. Some of these things can get fixed with a plan modification that would be reviewed by the trustee and approved by the BK Court and you can get a lower payment to help you complete your Ch 13 plan.
          What's proof of claim mean? Thanks!

          Comment


          • #7
            Originally posted by LadyInTheRed View Post

            lisa9519, I think you just recently filed, right? You will learn that your every financial move is not scrutinized. Most scrutiny is at the beginning, before confirmation. Once you are confirmed you will go about your life and rarely hear from your trustee. Yes, you have to get approval to sell major assets or incur new debt. That is hardly "nearly everything". Depending on your trustee, you may have to send copies of your tax returns every year. During my 5 year plan, the only time I heard from my trustee was once a year when she reported to me how she has managed disbursed my plan payments and then after I made my last payments when she sent me forms to complete, sign and send to my attorney.

            RollTide, in a Chap 13 you pay only your disposable income instead of what the creditors decide they will accept. You may not get all creditors to agree to accept reduced payments. Even if they do all initially agree, any one of them can change their mind at any time and suddenly file a lawsuit. With a Chap 13, you take control away from the creditors.
            So what if your income increases? Can you pay it off faster? Or does trustee automatically increase payments?

            Comment


            • #8
              A Proof of Claim, also known as a POC is a written statement (usually an official bankruptcy form that is filled out) that notifies the bankruptcy court, the debtor, the trustee, and other interested parties that a creditor wishes to assert its right to receive a distribution (pay out) from the bankruptcy estate. In most Chapter 7 and Chapter 13 cases where there are assets to distribute, creditors must file a proof of claim in order to get paid. The deadline for filing a proof of claim for non-governmental creditors in a Chapter 7 or Chapter 13 bankruptcy case is 90 days after the first meeting of the creditors.

              Comment


              • #9
                This is great information as I am getting ready to file I think it will be at 100% but not sure as it looks as if my unsecured creditors will get nothing in my plan only the secure creditors which is enough as my payments will be around 2300 a month. I'm scared as heck but I gotta do what I gotta do. I just hope I can survive this more worried about emergencies coming up. Also I want to be sure my yearly property taxes and HOA fees are properly noted as I don't need any surprises while budgeting what I have left for my other bills. Let the count down begin as I'm hoping I get to file tomorrow.

                Comment


                • #10
                  Originally posted by switch625 View Post
                  A Proof of Claim, also known as a POC is a written statement (usually an official bankruptcy form that is filled out) that notifies the bankruptcy court, the debtor, the trustee, and other interested parties that a creditor wishes to assert its right to receive a distribution (pay out) from the bankruptcy estate. In most Chapter 7 and Chapter 13 cases where there are assets to distribute, creditors must file a proof of claim in order to get paid. The deadline for filing a proof of claim for non-governmental creditors in a Chapter 7 or Chapter 13 bankruptcy case is 90 days after the first meeting of the creditors.
                  Thank you!

                  Comment


                  • #11
                    Originally posted by ronism View Post
                    This is great information as I am getting ready to file I think it will be at 100% but not sure as it looks as if my unsecured creditors will get nothing in my plan only the secure creditors which is enough as my payments will be around 2300 a month. I'm scared as heck but I gotta do what I gotta do. I just hope I can survive this more worried about emergencies coming up. Also I want to be sure my yearly property taxes and HOA fees are properly noted as I don't need any surprises while budgeting what I have left for my other bills. Let the count down begin as I'm hoping I get to file tomorrow.
                    While I have heard other definitions, when we refer to a 100% plan here, we mean that all of your unsecured claims get paid in full. So, it sounds like you will not be in a 100% plan. Be sure to review your petition carefully to make sure all of your expenses are included. If something is missing, do not sign the petition until it is fixed.
                    LadyInTheRed is in the black!
                    Filed Chap 13 April 2010. Discharged May 2015.
                    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                    Comment


                    • #12
                      Thanks LadyInTheRed, for explaining this forums definition of 100%. Nope mine is all secure creditors. All are listed and nothing is left off.

                      Comment


                      • #13
                        What happens if you get a new job that pays more and you are in your ch. 13 3-5 year plan? Will the trustee have you pay more on what you owe? Or is that extra income free and clear?

                        Comment


                        • puppiesrock
                          puppiesrock commented
                          Editing a comment
                          i'm no attorney but i imagine if you are in a 100% plan - your raises, bonuses or added income is all yours. mine said that that was the good thing about being in a 100% payback plan. now if you are not in a 100% payback plan, then they are going to want to take more income from you to pay as much down of your debt as possible.

                      • #14
                        Hi, that would be a question for your attorney. You need to report the income to your attorney who will bring it to the attention of your trustee. It really depends on the amount of the increase and if you are in a 100% plan or not,. II'm not certain how accurate this is, but i've heard the trustee will ask for anything above 10%. In our case, in a 100% plan, our attorney thanked us for telling him but said we can't pay more than 100% so our payment stayed the same
                        Filed Chapter 13 - 07/20/12
                        Discharged 8/2/16

                        Comment


                        • #15
                          Thank you!!!!

                          Comment

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