What does pennies on the dollar really mean?

[Mik3]

I have been told by more than one that its common for your debt to be reduced to "pennies on the dollar".

Is there truth to this, does the debt always get reduced to a settled amount, or can it be totally waved?

M

[espo1357]

I have been told by more than one that its common for your debt to be reduced to "pennies on the dollar".

Is there truth to this, does the debt always get reduced to a settled amount, or can it be totally waved?

M

chapter 7 will waive it all, if you qualify.

[MSbklawyer]

I have been told by more than one that its common for your debt to be reduced to "pennies on the dollar".

Is there truth to this, does the debt always get reduced to a settled amount, or can it be totally waved?

M

In a Chapter 13, your unsecured creditors are usually paid something, be it the DMI figure from your means test or whats left over each month on I minus J. That figure is usually expressed as a percentage of the total unsecured debt or -- cents on the dollar.

No, the debt doesn't always get reduced, sometimes there are 100% plans where unsecured creditors are paid in full. Conversely, there are 0% plans where the unsecured creditors are paid nothing.

[HHM]

In reality, in a regular debt settlement context you are looking at 30 to 50 cents on the dollar.
So, if you had $100,000 in credit card debt, depending on the age of the debt (and numerous other factors), you would need a budget of around $30,000 to $50,000 to settle that debt.

[Mik3]

Thank you much for the replies!

[espo1357]

In reality, in a regular debt settlement context you are looking at 30 to 50 cents on the dollar.
So, if you had $100,000 in credit card debt, depending on the age of the debt (and numerous other factors), you would need a budget of around $30,000 to $50,000 to settle that debt.

I am ending up paying about 25 cents on the dollar for the BK 13.

Not bad.

Also, when you consider that the payments are over 5 years, that is huge.

[boochase]

I owed $25K in credit card debt. Based on my lawyer's calculations, I will be paying about $155.00 per month for 36 months. Have paid $1850 to lawyer as retainer and rest of court/lawyer fees into Ch13 plan. I would say that I am paying pennies on the dollar.