WhyChat....some chapter 13 bk info..(long)
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Posted by celce (64.12.103.24) on July 07, 2002 at 21:09:27:
First let me say, WhyChat, your advice and comments are alway so right on...and the time you spend here is voluntary and so appreciated by us all. With that said...re:Chapter 13 bks...the amount repaid in a 13 bk is not determined on a percentage of a gross amount owed....rather it is determined by the monies you have left over after subtracting your monthly expenses from your monthly income and then it is paid to the creditors in the order that the creditors have standing in the bk...the class the creditor is in. Priority claims...which are taxes due within 3 yrs and 240 days of assessment, trust fund taxes, child support...these must be paid 100% Secured creditors...to the amount that their claim is actually secured. Now this doesn't mean 100%...creditors in this class can be "crammed down"...an example...you have a 2 year old car...the outstanding balance on your loan is $12,000....but the actual resale of the car would only net $8,000...in a 13 the creditor holding the car loan would then be "crammed down" to $8,000...and you would then only pay the $8,000. Another example...you have a federal tax lien that is unnattached to real property for $50,000...the personal property that you own which is also attached by this lien (irs liens attach to both real and personal property) is only worth $2,500...in your plan you pay $2,500...which is the amount that is secured...the irs lien is released or voided. The irs is then "crammed down" to $2,500. The bottom class is "general unsecured" creditors...they are paid last and many times not at all. Which would be the same as would happen in a 7. The rule of thumb in a 13 is that the creditors should fare as well as they would in a 7....but the big advantage in a 13 is you get to keep your assets...no fire sale. But you must pay 100% of priority and 100% of the amount that is secured to secured creditor claims...this is what pushes many into plans that go beyond the 36 months...up to 60 months. Bankruptcy is very complex...one should consult with an atty before making the final decision. Once filed it may stay on your credit report for 10 years. The CRAs have a policy that discharged 13s are removed in 7 but this is a CRA policy...the FCRA says all bks can stay on for 10 yrs...but the CRAs policy gives preferential treatment to bk 13 repayment plans..discharged...by removing them in 7 years...and any other bks...including a dismissed bk 13 for 10 years. The bk laws are complex...one should consuslt with a qualified atty before making any decision.
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