Salary Increase on 100% 5-year Chapter 13 repayment

[cajungirl588]

My husband filed a chapter 13 a little over a year ago. His plan is 100% repayment. He will most likely be receiving a large wage increase uin 2 weeks. I know we are required to report any increase in pay. My question is: will the trustee take all of that money. I was also thinking of getting a part-time job. I am not a debtor in his bankruptcy but he claims me as a dependent, just as he did when he filed. We were not married at the time he file his chapter 13. What I don't want is to go to work and have the trustee take all of my pay as well while I'm stuck paying daycare, this would lead to us losing money if I went to work. Does anyone know if the trustee will take all extra income even though he is paying back 100% ?

[keepinitreal]

My understanding is that when you're in 100% payback plan, you don't have to pay any more if you get a raise. Congrats on the large raise!

[Logan08]

Yes, we are investigating chapter 13 and our attorney told us the same thing. As long as you are paying 100% back - nothing changes.

[greenthinker]

I agree with the other replies. If he is already paying 100%, then there is no reason for the trustee to demand more. Otherwise, he would be paying back more than he owes. And yes, congrats to him on his raise...it will just mean that much more margin in the budget!

[Cgriswold]

It's one of those questions, however, that bother me. If all claims filed equal $33200 and my plan as confirmed calls for me to pay in 35800(which clearly covers all claims) why would the trustee require either 1. any raise or positive income change 2. my tax refund should I be entitled. THEY ARE GETTING PAID IN FULL. They should be leaving me alone for the next 4 years?

[kornellred]

If your creditors are getting paid in full then there is no reason why you should be in a bankruptcy situation. If they are receiving all of what you owe them, that means that you can actually afford to pay them. Read the sticky about payback percentages. A 100% payback means that all of the plan payment, minus trustee fees, is going to unsecured creditors. All secured debts must be paid in full in a Chapter 13 bankruptcy, so that is not even an issue. In such a case, Chapter 13 bankruptcy gives you a chance to complete the payments to your secured creditors without being hassled by the unsecured creditors.

If you can afford to pay your debts, Chapter 13 is a waste of time. All it could possibly do is save you several thousand dollars in interest. Since your credit is trashed already, you should let the whole issue die by the side of the road. Voluntarily dismiss the Chapter 13 and seek a resolution to your debt on your own terms.

[forgotten]

If your creditors are getting paid in full then there is no reason why you should be in a bankruptcy situation. If they are receiving all of what you owe them, that means that you can actually afford to pay them. Read the sticky about payback percentages. A 100% payback means that all of the plan payment, minus trustee fees, is going to unsecured creditors. All secured debts must be paid in full in a Chapter 13 bankruptcy, so that is not even an issue. In such a case, Chapter 13 bankruptcy gives you a chance to complete the payments to your secured creditors without being hassled by the unsecured creditors.

If you can afford to pay your debts, Chapter 13 is a waste of time. All it could possibly do is save you several thousand dollars in interest. Since your credit is trashed already, you should let the whole issue die by the side of the road. Voluntarily dismiss the Chapter 13 and seek a resolution to your debt on your own terms.

Everything that you wrote is just plain wrong...

A 100% payback means that you are paying back all that you owe. For example, my entire $1000/mo is going to unsecured, but I am at a 18% payback percentage. All secured debts do not need to be paid in full in a Chapter 13, only secured assets that you are trying to cram down would need to be paid in full. Neither my home or my cars will be paid off by the end of my plan.

100% payback in BK is not even close to what you would owe if you tried to pay it off on your own as all interest stops and they are forced to accept your 0% repayment plan over 5 years. Lets say you owed $100k in unsecured debt and were at the 29% default APR, to pay it back in 5 years you would need to make payments of $3174.19/mo. In a chapter 13 @ 100% your payment would be about $1766/mo (assuming 6% trustee fee), saving you $1408/mo / $84,480 over the course of 5 years.

You could try to settle for less than the full amount, but you would need all that money upfront, they are not going to accept monthly payments over 5 years.

[greenthinker]

In addition to the reasons that "forgotten" cited above, we will be using Ch 13 with 100% paid to our unsecured creditors to pay back the arrears on our mortgage, which would be very very difficult if not impossible to do otherwise. And, if you settle your debts on your own or with a debt settlement company, the amount of debt that you are forgiven becomes taxable income.

So, yes there ARE legitimate reasons to be in a Ch 13 at 100% payback. To make a blanket statement that no one should be in a Ch 13 at 100% payback is highly inaccurate.

Back to the original subject of this thread...if you are paying 100% already, any extra money that you make is yours.

[goon]

So question to those that say that if you are already at 100% payback that a raise doesn't have to go to the trustee. My understanding is that while this "might" be the case, that it is district/trustee dependent.
That the trustee "could" choose to take it ( in which case you would be paid off and out of the plan more quickly )

It would seem logical that if you are paying 100% anyway, why would they bother, the problem is that many 13's don't make it all the way for one reason or another (job loss, extreme hardship, missed payments, ....) At the end of the day the trustee wants their %, they don't know if you will still have a job tomorrow or not. So some of them feel that if you get a raise (and are in a 100% plan) that they should still take it, meaning you would be done sooner, as long as you are still making payments there is a risk that you will stop making payments for some reason or another, so they might as well get your money (and their %) while they know there is some there to get.

Someone please correct me if I am wrong here, but this was my understanding from what I have read here and what my lawyer has said.

For the person that said that that if you are at 100% payback that you shouldn't be in a ch 13, first off as others have stated the math doesn't necessarily work that way especially when you figure interest.
Secondly there are other factors that can have a significant impact, especially for those that can do cramdowns, or are giving back a house , or are way behind on payments, or ...

[Cgriswold]

Hi all. thanks for the responses. As far as SHOULD I be in a 13...well, I came to a point of having no choice. Yes, I was making my CC payments work...until an older debt i had cosigned for popped up and would not negotiate anything approaching reasonable terms. I fought and fought it outside of BK protection. When it was clear they were going to sue I decided to file. Right move? Well, it's working for me. yep, they are getting their $, albeit on a 5 year schedule and they have to live with that. I am not happy about being in this position but given the alternatives, a 13 made sense. This one creditor is 54% of my total base. Sucks hard that I couldn't work anything else out. But it is what it is and I look forward to being complete and having no worries about anything else CC related.

[kornellred]

Read the sticky entitled: "% Payback - it does not matter". I am in a 100% payback Chapter 13 myself, and I am paying $311 per month for 54 months on an unsecured debt load of $65,000. Go figure.

Good luck to all of you.

[NowImDownInIt]

Read the sticky entitled: "% Payback - it does not matter". I am in a 100% payback Chapter 13 myself, and I am paying $311 per month for 54 months on an unsecured debt load of $65,000. Go figure.

If you have $65k claimed on your BK in your base plan and you are paying @ $17k total over the 5 years toward your unsecured debt, then you are not by definition in a 100% payback plan and you are misunderstanding HHM's post.

[Cgriswold]

Read the sticky entitled: "% Payback - it does not matter". I am in a 100% payback Chapter 13 myself, and I am paying $311 per month for 54 months on an unsecured debt load of $65,000. Go figure.

Good luck to all of you.

Yeah, that math makes little sense to me.

Here is the math in my case...

Total claims filed(including trustee fees. NO atty fees, already paid)= $29808.66
Min to Unsecured: $16,170.00
Payment Schedule
Debtor
Start Date Start Thru Payment Total Pmts Type
11/20/2009 1 11 $175.00 $1,925.00
10/20/2010 12 13 $325.00 $650.00
12/20/2010 14 22 $425.00 $3,825.00
9/20/2011 23 34 $525.00 $6,300.00
9/20/2012 35 41 $600.00 $4,200.00
4/20/2013 42 59 $850.00 $15,300.00
10/20/2014 60 60 $1,000.00 $1,000.00

Total payments(60 months)= $33,200

It would appear to me that my plan calls for me over the life of the plan to pay in $3391.94 MORE than claims against me.

I would think the percentage DOES matter in that I am paying in every dime claimed as per the plan and so I should not be expected to turn over any other income, refunds, etc?? Or is that more than wishful thinking? I would understand if I was planning on paying back 35% for instance that anything above and beyond planned payments should go towards increasing my % to, whatever, like 39%. that makes perfect sense to me.

Go ahead, tell me I am wrong...

[kornellred]

Sorry this thread has been hijacked - apologies to the OP. At the National Data Center, on the case summary page, it says: percentage to unsecured or unsecured plan base: 100. It also says: plan base: $16,750. But on the claims page, the claims total approximately $65,000.

So that leaves me with a question: what is a "plan base" and what is it's relationship to the total of claims???

Reference my comments above.

[Pandora]

Sorry this thread has been hijacked - apologies to the OP. At the National Data Center, on the case summary page, it says: percentage to unsecured or unsecured plan base: 100. It also says: plan base: $16,750. But on the claims page, the claims total approximately $65,000.

So that leaves me with a question: what is a "plan base" and what is it's relationship to the total of claims???

Reference my comments above.

your plan base is the minimum you have to pay in towards all claims filed - it doesnt mean you wont have to pay more. In a BK ALL of your DMI is supposed to be put towards the debt, so technically you could pay off your base plan at year 4 but then get another job at higher pay and the trustee takes the extra money. This would result in your payment going up and more $ to your creditors if you're not in a 100% payback of all claims.

The 100% thing is for your total debt (claims) to be paid in full over the course of your plan. The DMI is always 100% because its all you have left over after expenses.