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$0 Payment Ch 13?

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  • $0 Payment Ch 13?

    talked to a new atty yesterday, and he said he thought he could get us into a $0 payment ch 13 (36 months). Anyone heard of this? If we could end up with something like this, how is it different than a ch7, other than it stretches the process for 36 months? Why would the courts allow such a thing, since only the atty (and trustee somehow) get paid?
    1/15/10 Filed ch7 2/18/10 314 meeting
    2/22/10 Report of No Distribution
    4/20/10 Discharged 5/20/10 Closed!

  • #2
    He is probably referring to zero to the unsecured creditors - and the entire payment gets disbursed to the attorney, the trustee and administrative fees and priority debt (it any). JMO.

    Ask him for clarification.
    Filed CH 7 9/30/2008
    Discharged Jan 5, 2009! Closed Jan 18, 2009

    I am not an attorney. None of my advice is legal advice in any way..

    Comment


    • #3
      I believe that is probably the case. If so, why would the court allow such a plan, when no creditors get repaid, and the debtor's property is "protected". Seems like a ch7 with the benefit that nothing is surrendered. Just thinking there must be a downside to it, other than stretching things out compared to a ch7. (?)
      1/15/10 Filed ch7 2/18/10 314 meeting
      2/22/10 Report of No Distribution
      4/20/10 Discharged 5/20/10 Closed!

      Comment


      • #4
        Originally posted by pcn View Post
        I believe that is probably the case. If so, why would the court allow such a plan, when no creditors get repaid, and the debtor's property is "protected". Seems like a ch7 with the benefit that nothing is surrendered. Just thinking there must be a downside to it, other than stretching things out compared to a ch7. (?)
        If there are NO creditors at all, you're right, it makes no sense -- but, then, neither would filing for bankruptcy. As the previous poster noted, he's probably talking zero to the UNSECURED creditors: most often, credit card issuers.
        Whatever payment you'll make would go entirely to bankruptcy administration AND secured/priority creditors, which would include mortgage lender, the IRS (if there is tax debt), auto lender, student loans, et al.
        You won't pay $0 (or, at least, I'd bet such a plan would never be approved). Your unsecured creditors will receive $0 of what you pay.

        Comment


        • #5
          Sounds like the same that was suggested by my attorney.
          I elaborated a bit more so people assumed more a blew things out of proportion, but heres the thread.

          Comment


          • #6
            Originally posted by pcn View Post
            talked to a new atty yesterday, and he said he thought he could get us into a $0 payment ch 13 (36 months). Anyone heard of this? If we could end up with something like this, how is it different than a ch7, other than it stretches the process for 36 months? Why would the courts allow such a thing, since only the atty (and trustee somehow) get paid?
            Do you have priority debts like overdue taxes?

            Do you have arrears with secured debts like house and car payments?

            The only way you will be in a 13 with less than 5 years and less than 100% payback is if you are below median and since you are talking about 0% payback to unsecured debts you must have almost no disposable monthly income. Unless you are making up arrears in your secured debts or paying back taxes you should be looking to file CH7.

            Comment


            • #7
              It really depends. It is "possible", but many courts require some dividend, even if it is 0.01%. There was recent case that discussed the issue and said that you cannot do a back door chapter 7 by filing a zero payment chapter 13.

              Comment


              • #8
                Originally posted by HHM View Post
                It really depends. It is "possible", but many courts require some dividend, even if it is 0.01%. There was recent case that discussed the issue and said that you cannot do a back door chapter 7 by filing a zero payment chapter 13.
                I have a back door Chapter 7, and I'm really considering converting to a Chapter 7. This back door Chapter 7 stuff is for the birds. For my trouble, I get to pay the Trustee about $530/month to send out 6 checks to the IRS and 5 secured creditors . Sheesh.

                You know what... I really wouldn't mind a front-door Chapter 20. (Okay, sorry to muddy the waters here.)
                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


                • #9
                  Originally posted by walkthaplank View Post
                  Do you have priority debts like overdue taxes?
                  Just found out last week we have a 5k penalty due for an early 401k withdrawl. Why?
                  1/15/10 Filed ch7 2/18/10 314 meeting
                  2/22/10 Report of No Distribution
                  4/20/10 Discharged 5/20/10 Closed!

                  Comment


                  • #10
                    Originally posted by justbroke View Post
                    I have a back door Chapter 7, and I'm really considering converting to a Chapter 7. This back door Chapter 7 stuff is for the birds. For my trouble, I get to pay the Trustee about $530/month to send out 6 checks to the IRS and 5 secured creditors . Sheesh.
                    1/15/10 Filed ch7 2/18/10 314 meeting
                    2/22/10 Report of No Distribution
                    4/20/10 Discharged 5/20/10 Closed!

                    Comment


                    • #11
                      Originally posted by pcn View Post
                      Just found out last week we have a 5k penalty due for an early 401k withdrawl. Why?
                      Why? What reason did you withdraw from your 401(k)? Are you 59 1/2 or older? Did you use it to purchase your primary residence? Did you use it to recover from Hurricane Katrina, Wilma or any other hurricane in 2006-2007, and live along the Gulf Coast?

                      Otherwise, you get a 10% penalty for early withdrawal, as well as you're taxed at regular tax rate.

                      Am I missing something?
                      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


                      • #12
                        Originally posted by pcn View Post
                        So what is the benefit to a backdoor 7? Why wouldn’t you rather have it over and done with in a "standard" 7? Did qualifications for the 7 stop that option? Thanks.
                        I am very very over the median, and I have some arrears that I wanted to cure. However, my DMI is negative and I pass the means test. So, kinda needed some of the features of the Chapter 13... plus stripping the second is nice.
                        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


                        • #13
                          Originally posted by justbroke View Post
                          I have a back door Chapter 7, and I'm really considering converting to a Chapter 7. This back door Chapter 7 stuff is for the birds. For my trouble, I get to pay the Trustee about $530/month to send out 6 checks to the IRS and 5 secured creditors . Sheesh.

                          You know what... I really wouldn't mind a front-door Chapter 20. (Okay, sorry to muddy the waters here.)
                          The case in question was literally $0 payment, not just $0 to unsecured. So long as some type of monthly payment is being made to the trustee, the plan can be confirmed (assuming all other criteria are met). So, by back door chapter 7, what I am referring to is someone filing chapter 13 (because they are not eligible to file chapter 7), but neither making nor proposing payments in a chapter 13 plan.

                          How you can sometimes get around this is by inserting language into the plan about devoting future disposable income to the plan, etc etc.

                          Comment


                          • #14
                            Originally posted by justbroke View Post
                            I am very very over the median, and I have some arrears that I wanted to cure. However, my DMI is negative and I pass the means test. So, kinda needed some of the features of the Chapter 13... plus stripping the second is nice.
                            OK, thanks, I understand. We're not "very very ", just "medium" over for AL (not that it takes much here). And the lien striping 2nd, I see. But still debating the "ch7 lien strip/settlement" here.
                            1/15/10 Filed ch7 2/18/10 314 meeting
                            2/22/10 Report of No Distribution
                            4/20/10 Discharged 5/20/10 Closed!

                            Comment


                            • #15
                              Originally posted by justbroke View Post
                              Why? What reason did you withdraw from your 401(k)? Are you 59 1/2 or older? Did you use it to purchase your primary residence? Did you use it to recover from Hurricane Katrina, Wilma or any other hurricane in 2006-2007, and live along the Gulf Coast?

                              Otherwise, you get a 10% penalty for early withdrawal, as well as you're taxed at regular tax rate.

                              Am I missing something?
                              1/15/10 Filed ch7 2/18/10 314 meeting
                              2/22/10 Report of No Distribution
                              4/20/10 Discharged 5/20/10 Closed!

                              Comment

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