Is this correct regarding Payment in Chapter 13??

[Nick9075]

If I did file chapter 13, I would almost certainly be pushed to a chapter 13 due to my income being over $20,000 the listed median for single person in the state of Massachusetts.

With that being said, if I take the amount of unsecured debt I would be including which is about $70,000 of credit card in total and divide by 60 months it is around $1,250. Much less than the payment needed to wipe this out myself while interest continues to accrue. Right now, I have a 563 FICO score, 90 & 120 days delinquent with 2 chase accounts totaling over $7,000 and very high debt/income ratio. Paying back near 100% of unsecured debt is much different in a chapter 13 where interest & fees stop or where you are trying to pay yourself at APR's of 15% - 25%

My credit is SO BAD now that people are encouraging me to file. One car dealer in Lynn Massachusetts actually told me that he is unable to approve me due to my credit profile and he could count on ONE HAND the number of people he couldn't approve at all who were employed full timefor as long as he has been working there. At this dealership you only need to make a whole $1,600 a month to get financed!! Best bet he said would be to file for a chapter 13 and try again six months after filing. This would be borrowing $8,000 and putting down $10,000 for a Chrysler 300C from 2006.
And

[busby]

You are correct in your basic math spreading your total debt out into 60-monthly payments but that is not always the case.

Your payment wouldn't be higher than the $1,250 you estimate ($70,000 total debt into $1,166 60-monthly payments) but could be considerably less than that.

If you pay back your total debt - you still would probably be in a better place since you are right - fees and interest stop accruing.

When you file for Chapter 13 your monthly income is established and your monthly expenses are added up. What's left over is what you pay into the plan each month.

However, once in a chapter 13 plan - you would need trustees approval to obtain a loan for a new car. This is something I don't have much experience with.

[Nick9075]

You are correct in your basic math spreading your total debt out into 60-monthly payments but that is not always the case.

Your payment wouldn't be higher than the $1,250 you estimate ($70,000 total debt into $1,166 60-monthly payments) but could be considerably less than that.

If you pay back your total debt - you still would probably be in a better place since you are right - fees and interest stop accruing.

When you file for Chapter 13 your monthly income is established and your monthly expenses are added up. What's left over is what you pay into the plan each month.

However, once in a chapter 13 plan - you would need trustees approval to obtain a loan for a new car. This is something I don't have much experience with.

What about any cash I have in my bank account when filing? I have about $7,000 + $20,000 in investments. I want to hold onto this money in case I need a car or some other emergency and I need to pay cash. Car repairs also come up when you least expect it and can add up very quickly.

I was unemployed for 6 months and needed to tap that investment fund. If I didn't have it I would be in worse situation (hard to imagine) now.

My understanding is that in chapter 13 you can keep all your assets & property right??

Still when I run my numbers into a debt paydown calculator it will take close to 36 months with payments near $3,000 to be out of debt on my own if I DID NOT file. My credit will still be trashed due to the 90 day & 120 day late payments listed on my credit.

[poorold]

have you considered negotiating with your unsecured creditors. after you get several months behind, they seem to be offering quite a good deal. in the 30% range.

you might get yourself debt-free in less than a year doing that.

[justbroke]

If I did file chapter 13, I would almost certainly be pushed to a chapter 13 due to my income being over $20,000 the listed median for single person in the state of Massachusetts.

False. Being over-the-median has nothing to do with qualifying to receive a discharge in a Chapter 7 case. Passing the means test is what allows you to receive a discharge in a Chapter 7 case.

With that being said, if I take the amount of unsecured debt I would be including which is about $70,000 of credit card in total and divide by 60 months it is around $1,250. Much less than the payment needed to wipe this out myself while interest continues to accrue. Right now, I have a 563 FICO score, 90 & 120 days delinquent with 2 chase accounts totaling over $7,000 and very high debt/income ratio. Paying back near 100% of unsecured debt is much different in a chapter 13 where interest & fees stop or where you are trying to pay yourself at APR's of 15% - 25%

What you pay to unsecured creditors, is based on the calculation of your disposable monthly income (DMI). It is not just taking your unsecured credit balances ($70K) and dividing it by 60.

So, why is it you "think" you have to file Chapter 13? Do you own a home?

(With that much cash on hand, or near liquid cash, you could consider making settlements. I'd try for 10-20% settlements and you could be done with $70K in debt for only $7 to $14K. )

[woeisme]

My understanding is that in chapter 13 you can keep all your assets & property right??

Incorrect! You MUST pay creditors at least as much as they would get if you were forced into a CH 7 liquidation. So if you have assets that are not exempt by BK rules worth X-dollars, then you MUST pay creditors at least X-dollars in your CH 13 to keep the asset. Does that make sense? Otherwise someone could have a hundred grand in the bank, owe their creditors a hundred fifty grand, and just quit their job to get their disposable income to $0, and file CH 13 and not have to pay anything back. That don't work! The rule is, you want to keep the hundred grand in this example, you need to pay your creditors at least a hundred grand over the 60 month period of your CH 13. You are talking about a much smaller amount of $, some of which will be covered by exemptions (depends on your state) and it sounds like you plan to pay much more than it into the CH 13 anyhow, so this may not apply to you, but just wanted to clarify that CH 13s aren't a get out of liquidating any of my assets free card, KWIM?

[Nick9075]

False. Being over-the-median has nothing to do with qualifying to receive a discharge in a Chapter 7 case. Passing the means test is what allows you to receive a discharge in a Chapter 7 case.

What you pay to unsecured creditors, is based on the calculation of your disposable monthly income (DMI). It is not just taking your unsecured credit balances ($70K) and dividing it by 60.

So, why is it you "think" you have to file Chapter 13? Do you own a home?

(With that much cash on hand, or near liquid cash, you could consider making settlements. I'd try for 10-20% settlements and you could be done with $70K in debt for only $7 to $14K. )

I am over $20,000 for the median income for ONE person here in Massachusetts. My expenses are also over the allowance on the means test.
Ex. In Essex County you are allowed $1,133 for housing payment. Mine is over $1,600 a month and I am on a 15 month lease.
Remember what I said about applying to over 30 places outside the Boston area and getting rejected at all of them?? Well this one accepted me but what happens after month 15 when the lease concession goes away and the rent will be around $2,000 a month plus utilities

I don't think anyone will settle for 30%, maybe 60%. If settlement was so generous why wouldn't creditors like Chase & BOA just lower the outrageous APR's and allow you to pay as agreed even if it closed the card to new charges?? I find it outrageous that Chase can charge 30% while taking bailout money and pushing people into these bankruptcy situations

As of now, I am not in the position to settle and need as much cash as possible. With the job market the way it is and the likely near impossibility of finding a new apartment when this lease is up I need to have as much in the bank as possible possibly to put up 6-12 months rent next August if necessary.

Also, regarding the excess cash & other assets that are non exempt. Isn't the point of Chapter 13 so one can keep these assets and file BK but have to pay back a portion (hense the means test) over these 5 years??

[justbroke]

I am over $20,000 for the median income for ONE person here in Massachusetts. My expenses are also over the allowance on the means test.

I remember that.

I don't think anyone will settle for 30%, maybe 60%. If settlement was so generous why wouldn't creditors like Chase & BOA just lower the outrageous APR's and allow you to pay as agreed even if it closed the card to new charges?? I find it outrageous that Chase can charge 30% while taking bailout money and pushing people into these bankruptcy situations

It's usually the Junk Debt Buyers (JDBs) that settle, because they paid much less for your account. Your debt would probably need to have aged and they are about to get a judgment. Negotiations don't always work, but sometimes it's worth a try if you have the money to negotiate with.

As of now, I am not in the position to settle and need as much cash as possible. With the job market the way it is and the likely near impossibility of finding a new apartment when this lease is up I need to have as much in the bank as possible possibly to put up 6-12 months rent next August if necessary.

I agree on that point alone!

Also, regarding the excess cash & other assets that are non exempt. Isn't the point of Chapter 13 so one can keep these assets and file BK but have to pay back a portion (hense the means test) over these 5 years??

Yes, you can keep, literally, everything in a Chapter 13.

However, it doesn't mean that you can afford to keep everything. In order to keep items with non-exempt value, you need to pay the Unsecured Creditors, at least as much as they would have received if you were to file a Chapter 7 and liquidate those assets. This is known as the liquidation test. So if you had $75,000 in unsecured debt, but had $100,000 worth of non-exempt assets... you'd have to pay 100% in your plan, or about $1,250/month to your unsecured creditors over a 60-month period. If you can't afford to pay that $1,250/month (on top of anything else you need to pay for secured debt like cars, home, taxes, lawyer fees, Trustee fees), then you'd have to liquidate some or all of it.