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% Payback (it doesn't matter)

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  • I've posted another thread on this but I wanted to be clear.

    In looking at my non-exempt equity I'll have about $6,000.00 total. My DMI will be about $1,000.00. It's my understanding that my plan must pay at least the value of my non-exempt equity or my DMI whichever is larger. I talked to my attorneys and they said my payment would be my DMI since it's the larger amount and they don't stack the non-exempt equity value on top of your DMI. Can anyone provide some feedback on this?

    Comment


    • Yes, that is accurate. The way we say it is "you must pay AT LEAST the value of your non-exempt assets to unsecured creditors". Your DMI almost always is greater... so it's the greater of your DMI or the value of your non-exempt assets.
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog


      I am not an attorney. Any advice provided is not legal advice.

      Comment


      • My 5 years was just up in November (and I am coded as 100% payback in NDC) when I called the trustee she told me that I make too much money and my plan would continue until the balance is zero? This takes me until August of 2013. I told them I thought it was 60 payments, she replyed that they can dismiss my case or I could continue to make payments, my choice?
        Chapter 13 - Filed 11/07 Discharged 5/13... finally

        Comment


        • I believe that Ohio is one of the states where it is 60 months from confirmation, not from when you started making payments. So, if Ohio is the one I'm thinking of, you could start "paying" (adequate protection) on Jan 1, 2000 and not get confirmed until Jan 1, 2001 and still need to pay through Jan 1, 2006.

          Besides, if you are in a 100% plan and have not paid the entire 100%, then the Trustee is being nice without needing to go through a Plan modification.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • This is an old sticky, but the latest threads seem to indicate that Trustees almost always want you to pay 100% DMI even if you are in a 100% plan and I wonder if that is still the case anymore.

            http://www.ncbrc.org/blog/2014/01/08...i-in-100-plan/

            I saw the above article and I wonder if more people are fighting it these days, in my district my lawyer said that trustees never try to get 100% DMI in 100% plans. I'm in a 100% plan and I never had to worry about my finances in general, the trustee didn't care and my payment wasn't even close to 100% DMI, if it had been, I would have never been able to complete the plan.

            To make things even better for me, it's looking like only 28% of my unsecured creditors filed a POC, so based on my calculations I will be done making payments 18 months after I started in a 60 month plan. In my case, the title of this thread couldn't be more wrong, because for me, the % POC is actually going to be life changing in a very positive way!

            Comment


            • Actually, the percent payback does not matter at all. While it may still be the case in some Districts, most Chapter 13 Model Plans that I have reviewed no longer include the language "percent payback" and only care about the total amount to unsecured creditors. That is because they have consistently found that this percentage is too fluid in non-100% cases. The % Payback neither refers, in any way, to the % of creditors that file a Proof of Claim (POC) nor the total values of the claims actually filed. The purpose of this thread was specifically to dispel the myth about the % Payback being the end-all-be-all.

              Additionally, I have not read where Trustees want you to pay 100% of your DMI in a 100% case. It is really up to your attorney to work with you and determine whether you want to pay 100% DMI in a case where you need to pay 100% of your unsecured debt. Typically, you do this because you want to have your discharge earlier. Just because a few Trustees are still arguing (in 2013) over something that is pretty solid caselaw doesn't mean that all the Trustees are trying to make debtors that are required to pay 100% to pay 100% of DMI.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment


              • Appologies for confusing % payback with % proof of claim, feel free to delete my post so it doesn't confuse others.

                Comment


                • Also, the percentage changes as the plan progresses. I started out at 3% and am at 18 now. If my plan ended once the 18% of claims are paid I would be done early, but the trustee and attorney both state to focus on the plan base. I thought the comment Justbroke used to describe it as fluid is a good way to describe the payback percentage.

                  Unfortunate that we must complete the plan even though it looks like we may be done early. I was disappointed but did not get to excited in the first place as it looked to good to be true.
                  11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP

                  Comment


                  • Originally posted by spidge View Post
                    Also, the percentage changes as the plan progresses. I started out at 3% and am at 18 now. If my plan ended once the 18% of claims are paid I would be done early, but the trustee and attorney both state to focus on the plan base. I thought the comment Justbroke used to describe it as fluid is a good way to describe the payback percentage.

                    Unfortunate that we must complete the plan even though it looks like we may be done early. I was disappointed but did not get to excited in the first place as it looked to good to be true.
                    Misunderstandings like yours is exactly what the thread was meant to address. Once the plan is confirmed, the only thing a debtor should worry about is the amount of the plan payment and the duration of the plan. The exception is that if you pay enough to pay 100% of all allowed claims, the duration will be shortened. I have heard of couple of rare exceptions where a plan ended early without pay 100% of unsecured claims, but nobody should count on that happening.
                    Last edited by LadyInTheRed; 06-21-2015, 03:54 PM.
                    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


                    • Old thread, but was curious if this all still held true in 2017, or if any laws have changed (guessing not)?

                      Comment


                      • Percentage payback does not matter (period). (The only exception is when you're in a 100% plan because that means you must payback everything over the life of the plan.)
                        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                        Status: (Auto) Discharged and Closed! 5/10
                        Visit My BKForum Blog: justbroke's Blog


                        I am not an attorney. Any advice provided is not legal advice.

                        Comment


                        • i wondered about this pct payback -- i believe i have seen this referred to as 'creditor dividend' too. My understanding meshes w/ the sticky post exactly. But at elast one bk attny was obsessed with it. when he showde me his computer screen , creditor dividend was very well pronounced in the upper left , and he wd say , we need to be at a certain creditor dividend. when I said that it does niot drive anythng, but is informational, he said that 'you must give them some incentive' to accept our proposal. [huh?] This is a very popular bk attny firm in my chciago area, btw,. w/ a big DT office.

                          further this firm said in the initial meetng that he was going for the '6 pct soluition'. he did not mention what this was however. In hte followup meeting I had the experience described above. it as a kmuch higher pctg and it was driven by what sticky post said, but yet he wanted it to be slightly higher than what the pure assets/dmi give for the reason I said above.

                          I got some more insight into this rationale recently tho w/ another consult w/ another bk attny. He said that in our district the trustee likes to see a creditor dividend at least 10 or so pct. Again, this flies in the face of the BK code, but this is what this guy said. we are talking northen district of il -- bigtime volume.

                          my personal take on this is as follows: just speculating.... ch13 is driven by assets and DMI as sticky says. DMI is pretty st forward; no questions - paystubs monthly bills, and math. But asset evaluation, especially real estate , is VERY , ahem, sticky indeed. I can give them one appraisal showing X value, and the trustee, *if he or she wanted*, cd find a counter appraisal for a (much) higher value. We cd zig and zag this way for-ever, OR, as long as the trustee sees that the debtor is paying in the 6 - 10 pct creditor dividend, they wont go into a tit-for-tat , dot the i , cross the t , counter appraisal etc. This is assuming that we are not talking mega money properties.

                          this is my take trying to connect the dots.
                          Last edited by rayrod; 09-19-2017, 05:20 PM.

                          Comment


                          • Originally posted by rayrod View Post
                            But at elast one bk attny was obsessed with it. when he showde me his computer screen , creditor dividend was very well pronounced in the upper left
                            It's just a computer program and was probably the programmed called Best Case.

                            Originally posted by rayrod View Post
                            and he wd say , we need to be at a certain creditor dividend. when I said that it does niot drive anythng, but is informational, he said that 'you must give them some incentive' to accept our proposal.
                            At the sake of being redundant and repeating myself, and the title of this thread, percent payback does not matter. Having wrote that, there are some very technical aspects of Chapter 13 which require a debtor to pay the unsecured creditors at least as much as they would receive in a Chapter 7 liquidation case. This is known as the best interest of creditors test and also known as the Chapter 7 liquidation test. The reason percent payback doesn't matter (in a non 100% plan), is because your DMI is your DMI is your DMI. That DMI goes to paying the unsecured creditors. If you are trying to keep property that you can't simply afford, you'll pay at least the DMI x 60 (or DMI x 36) or the value of the non exempt property, whichever is more.

                            The reason you don't understand the thinking is that this is complex. Showing you the screen from the program was probably the worst thing the attorney could have done. The mathematical formulas and the underlying "test" are complex and are often not easy to explain to a layperson. Suffice it to say that you will pay either DMI x 60 (or DMI x 36) or the amount of your non-exempt property... whichever is more.

                            (All references that I make are for non-100% plans.)
                            Last edited by justbroke; 09-21-2017, 08:41 PM.
                            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                            Status: (Auto) Discharged and Closed! 5/10
                            Visit My BKForum Blog: justbroke's Blog


                            I am not an attorney. Any advice provided is not legal advice.

                            Comment


                            • Originally posted by rayrod View Post

                              ... he said that 'you must give them some incentive' to accept our proposal. [huh?] ...

                              further this firm said in the initial meetng that he was going for the '6 pct soluition'. he did not mention what this was however. In hte followup meeting I had the experience described above. it as a kmuch higher pctg and it was driven by what sticky post said, but yet he wanted it to be slightly higher than what the pure assets/dmi give for the reason I said above.

                              I got some more insight into this rationale recently tho w/ another consult w/ another bk attny. He said that in our district the trustee likes to see a creditor dividend at least 10 or so pct. Again, this flies in the face of the BK code, but this is what this guy said. we are talking northen district of il -- bigtime volume.
                              I think you are confusing the law with the negotiations around how the law applies to the facts of each case. Your plan is your opening bid. If neither the creditor nor a trustee object to the plan, it will be confirmed. The attorneys are telling you what they will do to avoid an objection. One thinks that if your plan pays 6% to creditors, the trustee won't bother objecting. The other thinks 10% is the magic number. If the trustee objects to your plan, your attorney will try to reach an agreement to avoid taking the issue to the judge. If the issue has to go to the judge, your attorney's job will be to convince the judge that the law requires him to approve your plan. Here's the relevant law: https://www.law.cornell.edu/uscode/text/11/1325

                              My attorney included my car payment in my plan payment even though that wasn't required by the law "to give the trustee something to earn her fee on." My first instinct was to object to that. But, then I realized that the incentive he was giving the trustee to not object to my plan (a higher fee) only took money out of the pockets of unsecured creditors because as justbroke points out, my DMI is my DMI is my DMI.
                              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

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