What if creditor does not file claim?

[truckerswife]

We filed 13 on 9/07. We are aiming for 100% payback over 40 months. If a creditor does not file claim, what happens to that money? Does it pay off the bankruptcy sooner or does it lower our payment? I would prefer it to pay off sooner.

[arkienurse]

We filed 13 on 9/07. We are aiming for 100% payback over 40 months. If a creditor does not file claim, what happens to that money? Does it pay off the bankruptcy sooner or does it lower our payment? I would prefer it to pay off sooner.

Since you are in a 100% plan, a creditor not filing should shorten you plan by a bit.

( i think- I am old law and I know it did shorten my plan by not having everyone file, and I was in a 100% plan to start- not sure what the heck it is now- will keep paying until they stop taking it out of my check )

[lrprn]

We filed 13 on 9/07. We are aiming for 100% payback over 40 months. If a creditor does not file claim, what happens to that money? Does it pay off the bankruptcy sooner or does it lower our payment? I would prefer it to pay off sooner.

Under the former and current bk law, if your creditor does not file a claim, that creditor will never get paid by your plan payment. Best of all, the debt you owe that creditor is completely wiped out at the end of your plan.

Since your filed Ch 13 plan is set up for 100% payback to all your creditors listed, in your situation every creditor that doesn't file a claim is going to reduce the amount of time you have to be in your plan. Here's hoping you have more than a few who don't think it's worth the bother!

[inajam37]

Just wondering...

We are getting ready to file chapter 13. When you say 100% payback what does that mean? I guess my thought is that if I could pay back the 100% then I wouldn't need to file bankruptcy. The only thing that we are filing on is our credit card debt. Mortgage and car payments are current. It just scares me to think of paying back 100% because there's no way we could afford to do that in 5 years time. Please let me know and thanks so much. This forum is a great resource.

[lrprn]

It just scares me to think of paying back 100% because there's no way we could afford to do that in 5 years time.

Don't worry. I'm going to try to explain why as briefly as I can - hope it makes sense.

Here's how your monthly payment is distributed:
- Your trustee is going to take a % of your payment every month to administrate your plan (usually between 7-11%)
- Any payments that are paid "inside your plan" by the trustee (your car payment, for ex) are paid every month as well.
- If you still owe your lawyer any of his/her fee, that will be paid in full next.
- Then any priority creditors (the IRS, for example) will be paid in full.
- Then any special creditors (a small student loan, for example) will be paid in full.
- Last to be paid are your non-secured creditors that filed claims. (Those that don't file claims get nothing.)

You pay your monthly payment until you reach the number of months specified in your plan (36 or 60 months) or until your creditors are paid in full, whichever comes first.

In your case, it looks like you will reach your number of months first. At that point all payments to your non-secured creditors will stop and they will have gotten as much as they are ever going to get. Whatever is left is wiped out forever.

Let us know if this doesn't make sense - talking through what actually happens with your Ch 13 payments is one of the tougher Ch 13 explanations.

[inajam37]

Thanks...that makes a lot more sense to me. I kept thinking...oh my gosh it just keeps getting worse. I'm ready to get the ball rolling and get these payments under way. Here's hoping for smooth sailing.

[CindyLou]

I am editing this....I first asked if you were confirmed, but I just noticed you filing date....DUH!!!

This is how it went with my brother, who is 100% payback. He filed with around 85000 in debt. His attorney asked for a continuance of his confirmation pending his claims so that they could figure out his payment accurately. Only around 30,000 filed claims. Therefore instead of shortening his term they decreased his payment by A LOT!!! The way he understood it was that he didn't have the option of shortening the term. Maybe that varies by district. I am just sharing his experience, not saying what should or should not happen in your case. Hope this helps. 100% paybacks can be tricky. But they are so helpful in stopping the high interest and really getting those creditors OFF YOUR BACK! And it was interesting in his case to see the ones that were hounding him didn't even file claims. Go figure!

[dscurlock]

Don't worry. I'm going to try to explain why as briefly as I can - hope it makes sense.

Here's how your monthly payment is distributed:
- Your trustee is going to take a % of your payment every month to administrate your plan (usually between 7-11%)
- Any payments that are paid "inside your plan" by the trustee (your car payment, for ex) are paid every month as well.
- If you still owe your lawyer any of his/her fee, that will be paid in full next.
- Then any priority creditors (the IRS, for example) will be paid in full.
- Then any special creditors (a small student loan, for example) will be paid in full.
- Last to be paid are your non-secured creditors that filed claims. (Those that don't file claims get nothing.)

You pay your monthly payment until you reach the number of months specified in your plan (36 or 60 months) or until your creditors are paid in full, whichever comes first.

In your case, it looks like you will reach your number of months first. At that point all payments to your non-secured creditors will stop and they will have gotten as much as they are ever going to get. Whatever is left is wiped out forever.

Let us know if this doesn't make sense - talking through what actually happens with your Ch 13 payments is one of the tougher Ch 13 explanations.

silly question, why would a non secured loan not file a claim for their money. if they do not file, then they get nothing, that makes sense, but you think they would want to get their share by filing their claim...

[CindyLou]

in order for companies to file claims they have to employeentire departments to manage the filing of the claims and the receipt of the money, etc....some companies do not think it is worth the effort. Another reason may be that someone did not do their job and get the paperwork in on time or the paperwork simply got lost in the shuffle or the large sea of paperwork...imagine all the notices of BK at places like Chase, which by the way did not file a VERY large claim....12,000+ in my brother's case after hounding him like a dog for months!!!!

[woeisme]

To answer the poster who asked why you would do 100% payback, it's because you can't afford to do it outside the plan becuase the interest rates are so high, but inside CH 13 they are no longer sticking you with 30% and higher interest payments, so it's possible to be in a situation where you can afford to pay everything off under CH 13 but couldn't do it outside of 13. Does that make sense?

[EveryDayAdam]

My lawyer is filing my chapter 13 on Monday. It'll be interesting to see how many file claims. Anyone know if Amex files a lot of claims? About 1/2 my debt is with them.

[lrprn]

My lawyer is filing my chapter 13 on Monday. It'll be interesting to see how many file claims. Anyone know if Amex files a lot of claims? About 1/2 my debt is with them.

My husband had two AmEx cards - AmEx filed a claim for both, then immediately turned the claims over to bk specialty agencies that handle claims administration for the big creditors.

[CindyLou]

Amex seems pretty on top of their game. I filed a 7 and they were the only creditor to file a request of notice (cant remember the exact name....) where they wanted a copy of anything filed in my case. But again you just never know.... sometimes it does come down to human error. if they are one day late you get lucky!! Keep us posted!!

[wayne-o]

i had two amex accounts gold and blue. Gold filed blue did not.

Go figure

[aa06a47]

I had one AMEX, they were one of the first to file. My big surprise was with Citi....you would think they would have there A-game going since they were one of the big lobbiest to get everybody in a chapter 13. Well, they simply "walked" away from over 30K in credit card debt by not filing a claim. They even had to pay back into the plan a "preferential" payment since I had paid them over 1000 bucks two months prior to filing.