Chapter 13 Payment Plans

[kingmartin06]

I am meeting with a bk lawyer tomorrow, I am wanting to surrender my house, got too much house, I am pretty sure with my income and household of 3, that I am almost 100% certain I will have to file a chapter 13, I am just curious on what some of your payment plans are? My main concern is that a 13 will force me to have to pay so much into the plan that I will not be able to afford rent, utilities, food, gas, vehicles for 2 people in the household, I mean if they are going to take say 1000 a month as a rough example for a payment plan then based off my net income, I would not be able to afford what I need to to support a household. That's excluding any luxuries. So how do you survive?

[papie]

It won't do much good for anyone to tell you how much they pay, because each income, amount of debt, and household situation is unique. What I can afford is vastly different from what someone else can afford and vice versa.

I would suggest writing down your expenses and calculating every single thing you spend every month. That way when you meet your lawyer you can discuss any issues that may arise in affordability of the plan.

You need to have a very clear picture of how much you spend a month for necessities, because most people in a successful Chapter 13 live on a budget. The process ensures that you have enough to pay your bills and take care of business, it does not ensure that you can afford too many small luxuries.

[kingmartin06]

Thanks for the response, the way I budget goes likes this, I write down all the bills for the month what they are, and then after all bills are paid for, what is left over goes to gas for vehicles, groceries, toiletries, diapers, etc..

[papie]

I would really advise trying to put together what you realistically spend on things like gasoline and food for your lawyer also. Those are necessities and you need to account for these expenses when you agree to a plan.

There is a sticky at the top of this forum called "Justbroke's Chapter 13 Rant." It's a good read and explains why so many Chapter 13's fail and why you really need to account for every single expense.

[switch625]

What you pay each month for your chap 13 plan is your disposable monthly income, which is the amount left over after mortgage/rent, taxes, insurances, groceries, car payments and other living expenses you list on Schedule J of your BK petition. The total value of your nonexempt property also determines your plan payment because your unsecured creditors, at a minimum are to get in Chapter 13 what they would have received if you filed Chapter 7. The Ch 13 plan payment pays priority debts (i.e., taxes) and secured debts (mortgage arrearage) at 100%. Unsecured debt is paid 0% to 100% with the disposable income left over after all of these expenses.

For nearly the first two years of my five-year plan, my plan payment paid past due taxes, past due mortgage debt and a credit union personal loan (secured by a CU car loan) and at 100%. No unsecured creditors were paid during that time. Once those debts were paid off, the trustee then started paying the unsecured creditors and that will occur until month 60. They are getting less than 100% of the amount I owe them. My mortgage and CU car payment were paid outside the plan.

Your attorney will work with you to determine the plan payment you propose to pay.

[LadyInTheRed]

When listing your expenses, don't forget to include payments you make only once or twice a year and average them to come up with a monthly amount. Once you are in Chap 13, you will need to put enough money aside each month to make sure you can pay those expenses when they come up.

As already explained, you must pay all of your disposible income to the plan. Your finance will be tight, but you should be able to make ends meet.

[kingmartin06]

Thank you, I'm just exploring this as an option right now, Not sure how they take into account the payment plan if you surrender the home. I have emailed a few apartment complexes and asked if they accept a bk beforehand so I have somewhere a bit cheaper in mind to move to, however when you say you pay all your disposable income into the plan, I understand you may have lawyer fees through the plan, however I owe approximate 21,157.24 in debt which at 100 percent payback without interest divided by 60 that would be 352.62 for 60 months not adding in interest if they account for that, so I think it would be manageable as long as I can get into a cheaper place regardless, do they take into account any tax refunds when calculating the payment plan..you say you pay all your disposable income into the plan, so if I pay 800 a month for example for 60 months that would be way more than what I owe on the debt, is that how that works or do they just account for your total debt.

[sophieanne]

Hi kingmartin,

If you are in a 100% payback plan you WOULD NOT be paying more than you owed. In my case (also 100%), we paid the amount owed and trustee fees divided by 60 payments. We did NOT pay based on disposable income. I' understand that could be the case, but I think it is extremely rare in a 100% payback plan. If you were paying that higher amount, you would stop paying when the amount you owed was reached. When you meet with your attorney they can explain what would happen in your case.
Good luck!!!!

[kingmartin06]

Hi kingmartin,

If you are in a 100% payback plan you WOULD NOT be paying more than you owed. In my case (also 100%), we paid the amount owed and trustee fees divided by 60 payments. We did NOT pay based on disposable income. I' understand that could be the case, but I think it is extremely rare in a 100% payback plan. If you were paying that higher amount, you would stop paying when the amount you owed was reached. When you meet with your attorney they can explain what would happen in your case.
Good luck!!!!

Thank you for the response, that makes a clearer picture. I appreciate it.

[LadyInTheRed]

Yes, I was simplifying when I said that you pay all of your disposible income to the plan. A more complete description is you pay your disposible income or enough to pay 100% of unsecured claims and any other amounts that must be paid in your plan (arrears on secured debt for items you are not surrendering, non-exempt assets, etc), whichever is lower.

If you surrender your home, your mortgage is under water and the lender files an unsecured claim for the deficiency, then the deficiency gets paid along with other unsecured claims.

Keep in mind that you don't have to move immediately if you surrender the home. The home remains yours until the foreclosure is complete and title is transferred out of your name.

[sophieanne]

If you surrender your home, your mortgage is under water and the lender files an unsecured claim for the deficiency, then the deficiency gets paid along with other unsecured claims.

Hi LadyInTheRed...the lender can only file a claim for the deficiency (if they choose to) in a recourse state only??? That couldn't happen in WA state, for example, which is non-recourse state?

[tissa]

My lawyer said they might enforce some interest if you can pay 100% and you have more disposable income. But they didn't in my case. And even if they did usually the interest the court charges is around 4% instead of the 20% a credit card company might charge.

[sophieanne]

Hi Tissa,

The trustee charges a fee for their services..they do not charge interest. You may pay interest on a secured debt like car payment, but you do NOT pay interest on the services provided by the trustee,

[kingmartin06]

Whenever you put a value to your assets, do you give it your best guess? What do you say if the Trustee ask you how you came up with your values?

[sophieanne]

Hi kingmartin, I responded to the other post where you asked about this.

How diid your meeting go yesterday?