0% unsecured

[klux]

Has anyone ever been in a 0% payback to unsecured with the new law? I'm just curious, because I really don't see how they'll find any disposal income in excess of my secured debts.

[HHM]

In order to get 0% unsecured, 3 conditions must be meet.

1. Liquidation value would yeild 0% unsecured...which means, if you filed chapter 7 and all your non-exempt assets were liquidated to pay creditors, your unsecured creditors would get nothing.

2. Your expenses are reasonable

3. That your disposible income is such that, after paying adminstrative claims, priority claims, and required payments (i.e. secured debt) there is nothing left over to pay unsecured.

Even under the old law, 0% to unsecured was not common, and really, the rules regarding how much gets paid to unsecured creditors has not changed from old vs new law. All the new law did was put a cap on expenses; thus, theoretically releasing more income into the pool of disposible income.

It's very uncommon to have 0% to unsecured unless you have priority claims, i.e. Taxes, Child/spousal support. But, it is possible. The other reason 0% is uncommon, is that if the debtor really had disposible income such that you would pay 0%, chances are likely that the debtor qualifies for a chapter 7. Assuming there is no liquidation value, the battle takes place with the Trustee on #2, reasonablness of expenses, that is where the trustee nickle's and dime's to up the disposible income. Under the new law, the class of debtors that see 0% to unsecured at a an above average rate are those chapter 13 filers that are below the median income of their state.

0% to unsecured is legally possible, but under old law and new law, it is uncommon.

[klux]

Thank you. I do have priority claims and secured claims,(irs taxes, real estate taxes, mortgage arrears, vehicle arrears). I believe all my assets will be exempt. I'm above the median for a chapter 7, (I filed a chapter 13 in 2002, converted to 7 in 2005), so I can't do a 7 again. I'm ashamed to admit it, but as we all know life sometimes takes misterious turns.

[gunsmoke]

I'm 0% unsec.

[klux]

I'm 0% unsec.

I'm glad to hear that. Did you have a lot of secured debt? Just curious, because I think that's going to be my case.

[SinkingFast]

I've seen a Ch 13 filed here, on PACER, that's 0% to Unsecureds.

The people were below the Median. In arrears on their house, a car, and owed back property taxes. Their 3 year Ch 13 Plan payments pay the Trustee, the attny's fee, and their arrears. Unsecureds get NADA. And it's Confirmed.

So it does happen.

[cubfan300]

I too, am 0% unsecured. Mortgage and cars in arrears, lost $60000/yr. job following back surgery. Out of work for 5 months. Stuff happens.
Anyway, my $2450/month payment includes current and past due mortgage, car payments, and 1 year property taxes. In fact, my 13datacenter.com account actually says -1% unsecured.

[sarakay5]

We are also in a 0% plan. Our only secured debt in the plan is our van. Our house was current (and still is). Our unsecured debt was about $42,000.00.

I did not find this site untill after we filed so I did not understand all the rules. Our lawyer said we could and probably would loss the house if we went with a 7. Our disposable income showed -$235 per month and we were about $700 below the median. I'm not really sure how our plan was ever confirmed. It was confirmed within 4 weeks and we have had one promised audit which was very painless.

Not sure what is to come. We now have a new trustee and he may be more detailed than the last one, not sure.

All I know is that our lives have improved greatly. I love our budget and only using cash.

[klux]

It was confirmed within 4 weeks and we have had one promised audit which was very painless.

What do you mean by an audit, I haven't heard of that? What state are you in?

[sarakay5]

We are in IL. We were told at our 341 meeting that because our plan was 0% and the creditors would not be happy they would be auditing our plan within 9 to 10 months of confirmation.
Sure enough, we were asked to provide check stubs, bills and tax info for inspection. It was almost like starting the whole process over again. I have three binders that I keep all information in. I keep a data13 sheet to show all payments made to trustee and all check stubs. I keep all major bill stubs and records to show that our expenses are what we said they were.

I imagine when our payment drops again the just a few months there will be another audit. I'm ready for it. It is hard to say what will happen this time around (maybe it won't) since we do have a new trustee.

[klux]

We are in IL.
I imagine when our payment drops again the just a few months there will be another audit. I'm ready for it. It is hard to say what will happen this time around (maybe it won't) since we do have a new trustee.

I thought the payment amount stays the same throughout the plan. Why would it change?

[HHM]

I thought the payment amount stays the same throughout the plan. Why would it change?

Not necessarily.

The letter of the law: the debtor is to provide their disposable income to the chapter 13 plan. That is an "ongoing" duty for the life of the chapter 13 plan. So, if your income changes (i.e. increases), then that excess is "supposed" to go to the trustee.

As a practical matter, many trustees don't care. Even with good software, its a practical hassle to have to adjust the payment plan, so many trustees take the position that you stated; once the plan is confirmed, and so long as the trustee gets their payments each month, the trustee will not upset the plan. However, some trustees take a more literal approach and audit a debtor periodically. Most of the time, for those trustees that audit, that means supplying your tax return, and they do this for 2 reasons (1) to see if their is any refund they can get their hands on, and (2) to see if your income has substantially increased over the prior year's return.

Unfortunately, this issue is dealt with trustee by trustee, so if your trustee is more anal about these things, you may be audited periodically.

[sarakay5]

From the very start of our plan we knew what our payment plan was going to be. We paid one amount for 6 months. Then the amount dropped by $200. After 18 months from the start it will drop again by $115. Then it is to stay for the remainder of our 60 month plan.

This is how it was all set up by the lawyer from the very start.

[MOMof3]

We are 0% unsecured as well. $8000 in mortgage arrears & a mountain of credit card debt as well as cars we couldn't afford. Got rid of the big car payment and our plan includes arrears, current house payment (that just went up $300/mo), & my car payment---and of course a nice sum to our trustee as well. We now pay $3040/mo---yikes! I work full time and my paychecks are a whopping $72 every two weeks. Oh well, the mortgage is getting paid! We are OVER the median income, but failed the means test -- mainly due to daycare expenses!

[tylermom]

SaraKay5. We have filed a ch. 13 and are in IL as well. We are in central IL. Just curious where at in IL are you at? Now I'm getting worried about being audited as well since our attorney says we might be in a 0% plan as well. We haven't had our 341 mtg. yet.