You’re not my lawyer, and I’m not your client, and this is just a general question anyway.
On a Chapter 13, if you’re above median income you’re put into maximum length, five year plan, during which time you pay 100% of your disposable income in order to settle your debts. But I can’t seem to find an answer to this scenario: what if your total debts don’t require both 100% of your disposable income and 60 months? Is the length of the plan typically shortened, or is your plan payment typically below 100% of the calculated disposable income?
Bankruptcy judges have a good deal of leeway in how they handle these situations. It’s not a straightforward formula.
[/QUOTE]
Bummer, I hate surprises.
That’s the part I’m trying to figure out: which one? Would it be 100% of the disposable, or debt/60? At 100% of my disposable my payoff would be 14 months.
My intention would be 100% payback. In fact, the proposed debt would be the only debt that I’d enter into the Chapter 13. But I’d rather pay it back interest free over 60 months rather than lose 100% of my disposable income for 14 months.
I’d do this with a hired lawyer of course, but I’m trying to decide if it’s even worth the bother. I’m definitely gaming the system from some peoples’ perspectives, but I see it as a $30,000 cost save to me (in interest, not in unrepaid principal). However would the judge see me as “abusing” or “gaming” the system, and then tend to order 100% of disposable income for 14 months as “punishment,” or would he tend to let the 60 month plan go into effect?
Bummer, I hate surprises.
That’s the part I’m trying to figure out: which one? Would it be 100% of the disposable, or debt/60? At 100% of my disposable my payoff would be 14 months.
My intention would be 100% payback. In fact, the proposed debt would be the only debt that I’d enter into the Chapter 13. But I’d rather pay it back interest free over 60 months rather than lose 100% of my disposable income for 14 months.
I’d do this with a hired lawyer of course, but I’m trying to decide if it’s even worth the bother. I’m definitely gaming the system from some peoples’ perspectives, but I see it as a $30,000 cost save to me (in interest, not in unrepaid principal). However would the judge see me as “abusing” or “gaming” the system, and then tend to order 100% of disposable income for 14 months as “punishment,” or would he tend to let the 60 month plan go into effect?
[/QUOTE]
You can file 13 for basically any reason you want - and you can propose the payback as well - the trustee is the one you have to convince, the judge only ‘really’ comes into play if there is something that requires extra effort (ceditors that object, failing to pay, etc.).
If you have disposable income, they generally have the payback over 60 months, but you do not have to pay more than you debt, so the maximum would be debt/60 + the trustees fees, etc.
As far as I know, the plans are always for 60 months, but I believe there are some methods available to you to pay it off early - but only if that equals out to 100% of claims.
We did essentially the same thing - I called it a consolidation plan - we’ll be debt free in 5 years and will save ‘god knows how much’ in interest and aggervation.
Talk to a lawyer, several of them in fact, about your situaltion - the first consultation is almost always free and they can explain things to you that are based in your jurisdiction/situation.
ETA - the judges don’t punish you for using the system - and this is not abusing the system, assuming you qualify under the plans and you fulfill your obligations under them. The creditors are the ones that will attempt to ‘punish’ you (or even object, fi they feel up to it) - but unsecured creditors rarely do.
That’s basically my reasoning. I have no real cause, other than that I’ve decided that I don’t want to pay, simply. That sounds bad, but I did all of the right things, and our current federal government sees fit to bail out people that never should have had loans in the first place, and as long as I’m subsidizing them, I’m going to reclaim some of what I’m paying for. Unfortunately I’m still moral enough that I don’t actually want to steal from my bank or their investors, so I’m willing to pay back the principal. I’m actually willing to pay back market rates, but I’m “performing” so they won’t negotiate with me. Therefore, their punishment for not wanting to do a modification is surrendering the interest they could have earned.
That’s what I’m trying to debate now. If I follow the basic form 22C guidelines, the debt would be paid in 14 months at 100% disposable income, while I want to drag it out to 60 months, since it would be interest free. Plus, I like my extra income for entertaining myself and my wife. I want the bank to suffer, not us.
Not a problem; I don’t want to pay it off early. I only have a credit card that I pay off monthly anyway, and a car loan that I only took out to maintain a line of credit. And a 401(k) loan for my geothermal system. I would either keep them outside of the Chapter 13, or pay them off with my liquidity prior to the Chapter 13.
I really do want to pay off the loan; I’m just PISSED that the bank won’t deal with me unless I’m deficient, and that they’ll deal with losers who over-extended themselves. As punishment, I want to deny them the interest they could have earned. I realize that potentially I’m screwing myself due to the credit rating, but basically, I don’t anticipate needing more credit right now. Essentially every debt I have would be reported as “paid as agreed” (or whatever), except for the second mortgage.
I feel lucky; really, really, I do. I can afford my current debts; I obligated myself to them via a contract in good faith. However the “good faith” ends when they’ll negotiate with sub-prime borrowers and not with me. In my case, we’re talking $32,000 in interest if I follow the original terms.
I’ve talked to one who only does Chapter 7’s, who’s referred me to another. I’m awaiting a response currently. I’d prefer a voluntary modification given the circumstances, but am fully prepared for a Chapter 13, given that I can do 60 months versus 100% of expendable.
In this case, there would be a lien strip of a second mortgage, due to lack of equity, rendering it unsecured. Frankly, they’d have nothing to object to, other than the term. So, I’m back at the beginning.