Length of Repayment Plan

[AAAArt]

I have read that under the new BK law the repayment will be 5 years. I also have read that currently it is 3 years and I have also read that it is currently 5 years. I live in IL. Can anyone tell me if it is 3 years or 5 years and how they make that determination? Thanks

[hhou812hh]

I have read that under the new BK law the repayment will be 5 years. I also have read that currently it is 3 years and I have also read that it is currently 5 years. I live in IL. Can anyone tell me if it is 3 years or 5 years and how they make that determination? Thanks

It's currently no less then 3 and no more then 5. When you go into a ch13 you must pay your disposable income into a 3 year plan no matter what. Several factors will determine a 5 year plan.

1-If you have any non-exempt assets such as a car worth $12,400 and you have a $2400 exemption then you have non exempt assets of $10,000 that would go to a ch7 trustee if you files a ch7. If you want to keep the car you can file a ch13 and you must pay into the plan at least $10,000. If you can only afford to pay $200 a month then you would need 50 months (over 4 years)

2-The same thing as if you have any priority or secured debts you fell behind on such as taxes, mortgage payments and car payments. If you fell behind on these for 4 months or so you would have to pay back 100% in order to keep your house, car, etc. You may need over 3 years to get caught up so you don't lose it. They allow you up to five years to get caught up but no more.

If you needed more then 5 years then you would lose the assets in a ch7 liquidation.
If you have little or no assets and don't qualify for a ch7 because of too much income or non-dischargable credit card debt then you can get into a 3 year plan. At the end of your 3 year plan all unpaid unsecured debts are discharged no matter what they received. You can only pay the plan off earlier then 3 years if you pay 100% of what you owe.
The new law is 5 years no matter what.


Hopefully this sums it up.

[AAAArt]

Thanks

Thank you. That was a very helpful definition. I assume from what you're saying that in a chapter 13, you don't "re-affirm" debts such as your car, but that they are thrown into the overall plan.
My wife and I both bought our cars on the same day, August 31, 2003, so we exactly 3 more years of payments on them. Mine is already at 0% and her's is at 4.5%. We rent, so our only other secured debt is back taxes of $17,000 which if paid off without interest or penalties would be approx. $275.00 - $475.00 per month depending on whether we go 3 year or 5 years. Since I am currently on a re-payment plan w/ the IRS for $655.00 per month, it sounds like a good deal. I have about $21,000 in CC debt and the wife has about $8000. We were doing okay until I went on medical disability and then they sold most of my cc's and doubled and tripled the interest rate.
My attorney is supposed to get back to me this week and let me know whether they suggest a 7 or 13, individual or joint.

[hhou812hh]

Thank you. That was a very helpful definition. I assume from what you're saying that in a chapter 13, you don't "re-affirm" debts such as your car, but that they are thrown into the overall plan.
My wife and I both bought our cars on the same day, August 31, 2003, so we exactly 3 more years of payments on them. Mine is already at 0% and her's is at 4.5%. We rent, so our only other secured debt is back taxes of $17,000 which if paid off without interest or penalties would be approx. $275.00 - $475.00 per month depending on whether we go 3 year or 5 years. Since I am currently on a re-payment plan w/ the IRS for $655.00 per month, it sounds like a good deal. I have about $21,000 in CC debt and the wife has about $8000. We were doing okay until I went on medical disability and then they sold most of my cc's and doubled and tripled the interest rate.
My attorney is supposed to get back to me this week and let me know whether they suggest a 7 or 13, individual or joint.

That's up to you as far as the cars being in the plan. You can either re-affirm the car loans and keep them both outside the plan or if they are upside down then the ch13 trustee can strip the lien and you would only have to pay back the fair market value of the car and not the entire loan.

Yeah that sound about right with the taxes. As long as your assets are all exempt you would just have to payback the 17k in whatever terms you can afford, but not to exceed 60 months.

Good luck!

[HHM]

Yeah, the minimum length of a plan is 36 months (unless you payoff all unsecured at 100%).

I think you posted in another thread about your taxes and you had a mix of a tax lien, old taxes and recent taxes, so you would have a combination of Secured Tax Claim, Prirority Tax Claims, and Unsecured Tax Claims. The Tax Lien and Priority Tax Claims MUST be paid in the chapter 13. The Unsecured tax claims get lumped in with you general unsecureds. So long as the payments to your unsecured creditors is equivelent to the liquidation value (i.e. what they would recieve in a chapter 7), I seen no reason why your plan would be longer than 36 months.

As for the cars, you have two options in a the chapter 13 plan, (1) pay them directly as you normally do (its like reaffirming the debt in a chp 7, you keep making payments as usual). (2) do a cramdown, whereby you pay the car off through the chapter 13 plan at the current market value of the car. Option two is a good option if you are upside down on you car, and since you still have to make payments for 3 years, this could conceivably reduce your car payments.

[hhou812hh]

Yeah, the minimum length of a plan is 36 months (unless you payoff all unsecured at 100%).

I think you posted in another thread about your taxes and you had a mix of a tax lien, old taxes and recent taxes, so you would have a combination of Secured Tax Claim, Prirority Tax Claims, and Unsecured Tax Claims. The Tax Lien and Priority Tax Claims MUST be paid in the chapter 13. The Unsecured tax claims get lumped in with you general unsecureds. So long as the payments to your unsecured creditors is equivelent to the liquidation value (i.e. what they would recieve in a chapter 7), I seen no reason why your plan would be longer than 36 months.

As for the cars, you have two options in a the chapter 13 plan, (1) pay them directly as you normally do (its like reaffirming the debt in a chp 7, you keep making payments as usual). (2) do a cramdown, whereby you pay the car off through the chapter 13 plan at the current market value of the car. Option two is a good option if you are upside down on you car, and since you still have to make payments for 3 years, this could conceivably reduce your car payments.

HHM, I guess this means that you don't have to re-affirm the car loans outside the plan in a ch13?

[HHM]

Correct, in a chapter 13, you do not enter into reaffirmation agreements. The chapter 13 plan acts as the reaffirmation agreement (so to speak) if you elect to pay the secured note directly (i.e. outside the plan).