Just filed my 13 yesterday and I have a question on the length of the plan

[oneosu]

[hhou812hh]

"Good faith" is what they seem to look for in a ch13. You can probably afford to live ok (in the courts eyes) for 5 years and still pay off more debt. I don't have income like you, but my atty just the other day told me that if I was to file now for a ch13 the trustee would demand that I pay back 100% which is impossible to do over the next 5 years. I very heavily used credit 3 months ago and it would look like it's "bad faith filing" even for a ch13.

[JustChillin]

Do you think the trustee might force me into a 5-year plan? I have $4,000 secured and $7,000 unsecured debt excluding my student loan (75,000) which is in deferrment. I had counted on paying for 36 months or at a max 48 months. My plan payment right now will be between $186.00 to $230 a month with the unsecured getting about 30% in 36 months.

[oneosu]

Very interesting! So the bottom line is that you have to do what the trustee wants as an absolute. This debt was accumulated, when my wife had to quite her job for 3 years to care for one of children who became very sick. My wife is back working and our child is now healthy. Thank God! The last time I used a credit card was seven months ago. I just thought the law said that a good faith effort had to be made with all your disposable income for 36 months. Is my assumption not correct?

I appreciate everyone's response. Thanks all!

[oneosu]

HHM and Todd,

Do you all have any comments on the above?

[JustChillin]

I thought it was 36 months also.

[HHM]

The minimum amount of a plan is 36 months (the max is 60 months). The plan can only be shorter than 36 months if you pay your unsecured creditors at 100%.

If I had to guess, I think your lawyer is concered about the overall "liquidation" value of your bankruptcy estate, or that there are certain secured or priority claims that have to be paid leaving too little for your unsecured to have a 36 month plan.

The liquidation value tests is this: In any chapter 13 plan, your general unsecured creditors must get at least as much as they would if you filed chapter 7. So for example, if after all exemptions were applied, your unsecured creditors would get $25,000, they must at least receive that much in a chapter 13 payment plan. Thus, why a trustee extends a plan is that the debtor has certain secured or priority claims he also elects to be paid through the chap. 13 plan, but may not have sufficient disposible income to pay those secured and priority claims and the unsecured's their liquidation value in 36 months.

[oneosu]

[HHM]

Well, if everything you stated is the case, I see no reason why your chapter 13 need last longer 36 months.

[hhou812hh]

Were any charges/cash advances made recently like the past 3 or 4 months? As I mentioned earlier my atty informed me that the courts can deny a ch13 if it's a bad faith filing. If someone was to owe 40k and 20k was recently charged and your 36 month plan would pay back only 10k using the disposable income test this is considered a bad faith filing and the judge will either request close to 100% payback or deny you all together.

This is my local atty's words and not my opinion. I actually researched this on several legal sites good/bad faith is pretty broad and left for the judge to decide. The only way the above would be considered a good faith filing is if you borrowed a lot of money and a few months later had a loss of income such as a layoff and you got another job paying much less then the courts would understand.

[cpginvegas]

extended chapter 13 plan

I am in chapter 13 and my plan is for 42 months. The reason that I could not do 36 months is because I have a $30,000 loan from my 401K that I am repaying. If you have anything like that, then the unsecured creditors must be paid back at least as much as you are paying yourself. My payment is $1500 for 42 months and our income is $120,000. I also had a gambling marker of $27,000 which has to be paid 100% So, $1500 x 42 = $63,000 - $27,000 to casino, -$2700 to the attorney - $3150 for the trustee leaves $30,150 to the unsecured creditors. That is how my attorney explained why my plan is for 42 months instead of 36 months. Hope this helps.

[oneosu]

HHM,

I have discuss all of the above with my attorney. He said that we filed for a 36 month plan but that I should understand that the Trustee can force anyone into a 60 month plan. He said lets wait and see what happens at the creditor's meeting. As far as having the Trustee's decision reviewed by the judge, he said that the judge sides with the Trustee 99% of the time.

Is this correct that the Trustee does not have to have any reason other then he believes that this is not your best effort to extend your plan?

Thanks for your comments.

[HHM]

HHM,

I have discuss all of the above with my attorney. He said that we filed for a 36 month plan but that I should understand that the Trustee can force anyone into a 60 month plan. He said lets wait and see what happens at the creditor's meeting. As far as having the Trustee's decision reviewed by the judge, he said that the judge sides with the Trustee 99% of the time.

Is this correct that the Trustee does not have to have any reason other then he believes that this is not your best effort to extend your plan?

Thanks for your comments.

The trustees decision is not arbitrary because they do have to convince the judge, now maybe the judge will always side with the trustee, but nevertheless, the trustee will have to meet a minimum burden of proof. Based on what you said about your debt and the payment you will have to make, the trustee's argument would probably be that you have the ability to pay back 100% of creditors in about 55 months, and therefore you should. ($190,000/$3,500per month).