Minimum payment in chapter 13

[liz417]

We are hoping to file for chapter 13 in August (saving the $ for the lawyer). We have appox. $72,000 in unsecured cc debt, after I've filled out the paperwork given to me by my attorney and filled out our expenses...I don't think we'll have any $$ left over to pay the trustee. What is the minimum payment a BK trustee will allow in Chapter 13? I've read some threads, that a minimum of 25% has to be paid back, etc....I'm soooo confused!!!!

Thank You!

[lrprn]

What is the minimum payment a BK trustee will allow in Chapter 13?

The bk law states that your creditors must receive at least what they would have received if you had filed Ch 7. That's the minimum payment.

We have several members who filed Ch 13 and their monthly payment covers their lawyer's fee and not much more. However, this takes a very special set of financial circumstances that few filers have.

Your monthly payment will be determined by how you come out on the required Means Test and Schedules. It's a very complicated cross-comparison between exemptions, assets, income, and expenses.

Since writing a good Ch 13 plan is much more of an art than a science, finding an excellent Ch 13 lawyer who is very experienced filing Ch 13s in your local court is the most important thing you can do to ensure a successful conclusion to your Ch 13.

[liz417]

If I had filed Ch 7, won't the creditors receive nothing? Am I missing something?

[EveryDayAdam]

liz, is there any reason you are filing a 13 instead of a 7? The only real time to do that would be if you had significant assets to protect, a lot of equity in your home, or you wanted to protect from losing your home?

Most people, even those with hundreds of thousands of dollars of CC debt, would still be able to exempt all of their assets...

If you have a lot of equity in your home, then you might not have enough exemptions to protect it all from a chapter 7, in which case, you would have to pay the difference between your equity in your home and your exemptions.

Please take a long hard look at what you are about to do and solidly consider going the chapter 7 route. Most BK attorneys want to push you in to a 13, because they get to charge more for them...so don't let your attorney tell you that 13 is the only way to go. If you make under the state median, and you don't own much more than your household goods, then chapter 7 is almost always the right answer.

Remember: most property is worthless...the only real property to consider would be your house, car, and VERY fine personal property (china, jewelry, silver, fine art, etc.) electronics, furniture, appliances, etc. aren't worth much at all... The value you should be thinking is "what would I get for this at a garage sale?"

[liz417]

Adam,

Yes, I have a home I want to keep, although there isn't much equity left (I live in California) and we make well above the median...my attorney suggested ch 13 because she thinks the cc companies won't object to a repayment plan. I have a gambling addiction, so a lot of the $$ was cash advances, etc. within the past year. The attorney thinks a ch 13 would look better to the trustee since I am showing getting help for my addiction.

[HHM]

I think you guys are misunderstanding the 25% requirement.

Debtor's are NOT required to payback 25% of their unsecured debt in a chapter 13. The 25% issue arises under 707(b)(2)(A)(i)(I), which presumes a chapter 7 filing is abusive (and therefore not subject to discharge) IF the debtor can pay "at least" $6,000 OR 25% of the debtor's non-priority unsecured claims in 60 months.

[Flamingo]

Please take a long hard look at what you are about to do and solidly consider going the chapter 7 route. Most BK attorneys want to push you in to a 13, because they get to charge more for them...so don't let your attorney tell you that 13 is the only way to go. If you make under the state median, and you don't own much more than your household goods, then chapter 7 is almost always the right answer.

I disagree as to your second sentence because the new law itself, effective 10/05, pushes more filers toward Chapter 13. Sometimes you just can't do what you want to do. If one looks hard enough, you could probably always find an attorney to do what you want and not what should be done and it all becomes a mess later as many postings in this forum indicate.