Chapter 13 Consolidate Debt Consolidate Debt Pay Smaller Monthly Payments Pay Smaller Monthly...

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Chapter 13 Chapter 13 Consolidate Debt Consolidate Debt Pay Smaller Monthly Payments Pay Smaller Monthly Payments

Transcript of Chapter 13 Consolidate Debt Consolidate Debt Pay Smaller Monthly Payments Pay Smaller Monthly...

Page 1: Chapter 13 Consolidate Debt Consolidate Debt Pay Smaller Monthly Payments Pay Smaller Monthly Payments.

Chapter 13Chapter 13

• Consolidate DebtConsolidate Debt

• Pay Smaller Monthly PaymentsPay Smaller Monthly Payments

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Priority DebtPriority Debt

• Taxes and Domestic Support Taxes and Domestic Support ObligationsObligations

Repaid at 100%Repaid at 100%

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Priority DebtPriority Debt

• Taxes and Domestic Support Taxes and Domestic Support ObligationsObligations

Repaid at 100%Repaid at 100%

• Student LoansStudent Loans

Paid at a %, but still owedPaid at a %, but still owed

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Priority DebtPriority Debt

• Taxes and Domestic Support ObligationsTaxes and Domestic Support ObligationsRepaid at 100%Repaid at 100%

• Student LoansStudent LoansPaid at a %, but still owedPaid at a %, but still owed

• Government Fines, Bad Checks, Government Fines, Bad Checks, Retirement Loans, Ongoing SupportRetirement Loans, Ongoing SupportPaid direct at 100%Paid direct at 100%

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Priority DebtPriority Debt

• Taxes and Domestic Support ObligationsTaxes and Domestic Support ObligationsRepaid at 100%Repaid at 100%

• Student LoansStudent LoansPaid at a %, but still owedPaid at a %, but still owed

• Government Fines, Bad Checks, Retirement Loans, Government Fines, Bad Checks, Retirement Loans, Ongoing SupportOngoing SupportPaid direct at 100%Paid direct at 100%

• All OthersAll OthersTreated as Unsecured DebtTreated as Unsecured Debt

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SecuredSecured

• Regular MortgageRegular Mortgage

Paid direct at 100%Paid direct at 100%

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SecuredSecured

• Regular MortgageRegular Mortgage

Paid direct at 100%Paid direct at 100%

• Mortgage ArrearagesMortgage Arrearages

Paid at 100% without interestPaid at 100% without interest

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SecuredSecured

• Regular MortgageRegular Mortgage

Paid direct at 100%Paid direct at 100%

• Mortgage ArrearagesMortgage Arrearages

Paid at 100% without interestPaid at 100% without interest

• 910 Property910 Property

Paid at 100% plus interestPaid at 100% plus interest

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SecuredSecured

• Regular MortgageRegular MortgagePaid direct at 100%Paid direct at 100%

• Mortgage ArrearagesMortgage ArrearagesPaid at 100% without interestPaid at 100% without interest

• 910 Property910 PropertyPaid at 100% plus interestPaid at 100% plus interest

• All Other PropertyAll Other PropertyPaid at 100% of value plus interest on valuePaid at 100% of value plus interest on value

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More than 910 days prior to More than 910 days prior to filingfiling

If:If: Car DebtCar Debt 18,00018,000Car ValueCar Value 12,00012,000InterestInterest 21%21%

Plan paysPlan pays 100% of100% of 12,00012,000PlusPlus ~9% interest~9% interest

Balance ofBalance of 6,000 as 6,000 as unsecured debtunsecured debt

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Cross-Collateralized DebtsCross-Collateralized Debts

• Credit Union DebtsCredit Union Debts– Unsecured debts are actually securedUnsecured debts are actually secured– Chapter 13 – May Selectively ReaffirmChapter 13 – May Selectively Reaffirm

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Executory ContractsExecutory Contracts

• All Executory ContractsAll Executory Contracts

Paid direct at 100%Paid direct at 100%

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UnsecuredUnsecured

• Percentage Paid to UnsecuredPercentage Paid to Unsecured == The The Larger of (liquidation analysis, Larger of (liquidation analysis, Schedule I & J excess income, or Schedule I & J excess income, or Form 22 excess income) Form 22 excess income) divided by divided by the Total Unsecured Debtthe Total Unsecured Debt

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Property Value Property Value - - Debt Against the PropertyDebt Against the Property == EquityEquity

EquityEquity-- Costs of SaleCosts of Sale = Net Value of Property= Net Value of Property

Net Value of Property Net Value of Property -- Exemptions Exemptions = Value Available for Creditors= Value Available for Creditors

Liquidation analysisLiquidation analysis

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Excess IncomeExcess Income

Total Monthly Income Total Monthly Income

–– Reasonable ExpensesReasonable Expenses

= Excess Income= Excess Income

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Calculating Excess IncomeCalculating Excess Income

The Last 6 Months Income/6 The Last 6 Months Income/6

–– IRS Approved ExpensesIRS Approved Expenses

= Excess Income= Excess Income

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Amount returned to Amount returned to UnsecuredUnsecuredSchedule I & J excess income x plan length Schedule I & J excess income x plan length

== XX

Form 22 excess income x plan length Form 22 excess income x plan length

== YY

Liquidation analysisLiquidation analysis

== ZZ

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Amount returned to Amount returned to UnsecuredUnsecuredSchedule I & J excess income Schedule I & J excess income x plan length x plan length == XX

Form 22 excess income Form 22 excess income x plan length x plan length == YY

Liquidation analysisLiquidation analysis == ZZ

The Greater of The Greater of X, Y, or ZX, Y, or Z = The % Paid to Unsecured = The % Paid to Unsecured CreditorsCreditors

Total Unsecured DebtTotal Unsecured Debt

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Co-Signed DebtCo-Signed Debt

• May be paid at May be paid at 100%100% in the Plan in the Plan

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Court Costs, Attorney Fees, Court Costs, Attorney Fees, and Trustee Feesand Trustee Fees

• Attorney FeesAttorney Fees $2750.00$2750.00

• CostsCosts $446.00$446.00

• Trustee’s FeesTrustee’s Fees 10% of Plan 10% of Plan PaymentsPayments

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Calculating a Plan PaymentCalculating a Plan Payment

Priority Debt x 100% Priority Debt x 100% == AAStudent Loan Debt x 10%Student Loan Debt x 10% == BBSecured Debt x 100%Secured Debt x 100% == CCSecured Debt x 9%Secured Debt x 9% == DDUnsecured Debt x 10%Unsecured Debt x 10% == EEBalance of Attorney FeesBalance of Attorney Fees == FFA + B + C + D + E + F x 11%A + B + C + D + E + F x 11% == GGG x 10 divided by 57G x 10 divided by 57 == Monthly Monthly

PaymentPayment

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AssetsAssets

• Keep everything except Tax RefundsKeep everything except Tax Refunds

Total Tax RefundTotal Tax Refund

- $1,000.00 - $1,000.00

= Amount paid to Court= Amount paid to Court

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Bank AccountsBank Accounts

• Open a New Account Open a New Account BeforeBefore you File you File

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Recap of Chapter 13Recap of Chapter 13

• Priority DebtPriority Debt Taxes paid at 100%Taxes paid at 100%Student Loans paid at %Student Loans paid at %Fines and Support paid direct at 100%Fines and Support paid direct at 100%All Other paid as unsecuredAll Other paid as unsecured

• Secured DebtSecured Debt Mortgage paid direct at 100%Mortgage paid direct at 100%Mortgage arrearages paid at 100% without Mortgage arrearages paid at 100% without

interestinterest910 Property paid at 100% plus interest910 Property paid at 100% plus interestAll Other paid at 100% of value plus interest on All Other paid at 100% of value plus interest on

valuevalue

• Executory ContractsExecutory Contracts Paid direct at 100%Paid direct at 100%

• UnsecuredUnsecured Paid at %Paid at %

• AssetsAssets Keep all but excess refundsKeep all but excess refunds