Chapter 13 - Disposable Income Exceeds Amount to pay 100%

[mike197]

What is the name of your state? Colorado

My income is higher than median, so I will be required to do 5 year plan. After doing calculations for disposable income, 60 payments would overpay my debts that I owe by 30%. Will my payments be set at my disposable income and just end after 100% has been paid back.. ie 49 months? Or can my monthly payment be lowered so equal payments are made over the 60 months?

 

[adjusterjack]

Those are questions to ask your lawyer.

 

[mike197]

Those are questions to ask your lawyer.

Yes, I know that, I haven't seen my attorney yet. Thought someone on here may have some insight as they may have experienced the same thing.

 

[LdiJ]

Yes, I know that, I haven't seen my attorney yet. Thought someone on here may have some insight as they may have experienced the same thing.

A friend of mine is right at year 4 of her bankruptcy and she will have paid everything off in about 4 more months. So they didn't lower her payments.

 

[despritfreya]

11 USC 1325(b)(1) states. . .

If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan—

(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.

So, in most jurisdictions, if the debtor’s Plan will pay 100% of all allowed claims - which covers (A) above, then the debtor does not have to commit projected disposable income - which covers (B) above.

You need to ask your attny if your jurisdiction allows you to pay less than disposable income if you are paying 100% over the commitment period (60 months).

Des.

 

[mike197]

11 USC 1325(b)(1) states. . .

If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan—

(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.

So, in most jurisdictions, if the debtor’s Plan will pay 100% of all allowed claims - which covers (A) above, then the debtor does not have to commit projected disposable income - which covers (B) above.

You need to ask your attny if your jurisdiction allows you to pay less than disposable income if you are paying 100% over the commitment period (60 months).

Des.

Thanks for the info. Very helpful. Another question... if you are paying 100%, getting a raise or a bonus should not have to be surrendered... correct?

 

[despritfreya]

if you are paying 100%, getting a raise or a bonus should not have to be surrendered... correct?

If your district interprets 1325(b) as indicated in my post then, so long as the Plan is 100% an upward change in income should not matter.

Des.