QUESTION
When you file Chapter 13, do you have to pay back 100% of the debt?
Asked on Mar 08th, 2012 on Bankruptcy - Minnesota
2 ANSWERS
Bankruptcy Attorney serving Burbank, CA
Partner at
Law Office of Mark J. Markus
Reviews not shown
3 Awards
As the others have pointed out, you don't necessarily have to repay 100% of your debt in a Chapter 13 case (although even if you did, the monthly payments would be at zero percent interest and far lower than you have outside of bankruptcy).
The amount of the monthly payment is determined by several factors, one of which is your budget (which is determined in different ways, including your income received in the six calendar months prior to filing your case). Another factor is that you must pay your creditors at least as much as they would get in a Chapter 7 case. Thus, if you have non-exempt assets that would get sold in a Chapter 7 case, you have to pay out at least that much over the life of your Chapter 13 plan.
A consultation with an experienced bankruptcy attorney in your area will yield the specific requirements for your situation.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
bankruptcy blog: http://www.bklaw.com/bankruptcy-blog/
Follow Me on Twitter: @bklawr
Answered on Apr 02nd, 2012 at 8:26 PM
William/J Joanis
No.. You need to propose a plan in good faith and which commits your disposable income for the period of the plan to the payments. There are other requirements, and terms like "disposable income" have particular meanings that are defined by the law. But the answer to your question is "no." For example, in Drummond v. Welsh (In re Welsh), 2012 Bankr. LEXIS 918 (Bankr. Fed. App. 2012) a plan was upheld on appeal where it paid unsecured creditors 8-1/2% of their claims.
Answered on Mar 10th, 2012 at 4:14 PM