So if I file a Chapter 13

[howdidithappen]

will my Credit Card debt amounts be lowered if I cannot pay them off in five years?

[HHM]

If you receive a "discharge" of your chapter 13, then any remaining balances owed on credit cards that were included in the Chapter 13 are eliminated.

[Ortgeist]

My lawyer explained to me that the creditors that are unsecured (like credit cards), in our case, would not be getting anything. This is because we do not have alot of disposable income right now. So we are paying the secured debts (mortgage, car loan, student loans, etc), lawyer, and trustee fees in our monthly payment for 5 years. Whatever we have left over the standard IRS allowance for living expenses and such will be considered "disposable income".
If you do have alot of disposable income, then the unsecured creditors might get something, but probably not the debt that you have with them now.
You will pay back a portion of the amount owed or in some cases, the creditor will not get paid. It depends on your income situation. Some people have a zero payback where they pay the lawyer and trustee fees and that's about it.
Your attorney can discuss how this works with you.
Are you working with an attorney?

[howdidithappen]

I saw one attorney yesterday

but am unsure if he gave me all the steps/facts, etc. I have very little disposable income due to high medical expenses. I have been divriced for a number of years and will apply for a support increase. He did tell me I did not qualify for a Chapter 7 without giving me a reason. I have to move quickly since I received a summons last friday.....

[DeadManCrawling]

You may not qualify for a chapter 7 because:

1. You make over the median income in your state and do not have enough legitimate expenses to "pass" the means test.

2. You have assets you wish to retain that would otherwise be sold in a chapter 7.

At the end of a 5 year payment plan, any remaining debts which are unsecured (credit cards, loans that have no collateral) are wiped out entirely.

Note that taxes that are newer than 3 years will not be affected, and most of the time student loans cannot be discharged.

You can delay the court proceedings by showing up at court on the date ordered and disputing the debt. This will buy you some time, a few months maybe, as they will then schedule another hearing. If you do NOT show up, or have not filed for BK before the court date, they will enter a default judgment and things get more complicated.

If the summons was for back payments on a mortgage or secured debt, that would also complicate things further. While a summons and foreclosure in the courts would be stopped for a while, it would be brief if it was due to mortgage issues, unless you were doing a 13. In that event, the court would include arrearages in the payment plan.

[howdidithappen]

Trustee Fees

I thought trustees fees were used for payemnts to your creditors? So they are receiving some money, correct? How do I dispute a credit card balance at this point? Thanks for yur help!!!

[DeadManCrawling]

Trustee payments are used to pay creditors, but in general, unsecured credit cards would receive a small percentage of what you owe, as determined by the court.

Also, trustee administrative fees and other costs are included in the payment.

Most people do not pay back 100% of credit cards and other unsecured debts. After 5 years, a card company may recieve 10% or even ZERO percent, depending on the situation. There is nothing they can do about this, and whether they received 100% or nothing, the debt is wiped out, as long as you complete the plan.

As far as disputing charges at this point, I have no idea. Someone else may chime in, and this is info I would like to know as well.

Best wishes,


-dmc

[HHM]

Unfortunately, you seem to be missing (and no offense...or misunderstanding) some basic tenants of a chapter 13. If you have not already filed, you may want to schedule a consultation with another lawyer or two.

In a Chapter 13, you, the debtor, proposes a plan to make a monthly payment to the Chapter 13 Trustee (this is known as your Plan Payment). The payment amount based on your disposable income, i.e. the positive difference between your income (from all sources) and your allowable expenses. The length of the plan is 60 months in most cases. The chapter 13 trustee, turns around and makes payments to your creditors based on their priority (which is outlined in the BK code) and the trustee keeps 10% as their fee.

As a matter of providing complete information, you list your creditors and how much you think you owe them on your BK petition. However, once the creditors get notice of our Chapter 13, they will submit what is known a as a "Proof of Claim". If you feel the amount the creditor has listed on their proof of claim is in error, you can file an Objection to the Creditors Proof of Claim, but you need to have a leg to stand on when it comes to disputing the amount. Especially with credit cards, interest is compounded daily, and if you missed any payment, there are late fees and penalties that add-up. In cases, like yours apparently, it really doesn't matter what amount they claim because they are going to get very little anyway, because you have very little disposable income.

If you have more debt than you can pay back in 60 months with your disposable income...any remaining balances left at the end of the Chapter 13 plan, will be eliminated.

[howdidithappen]

Thanks your replies

were very helpful. Due to medical expenses in the past two years as well as the increase in cost of living, I've fallen quite behind and without paying the CC bills have little disposal income.