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Chapter 13Chapter 13
• Consolidate DebtConsolidate Debt
• Pay Smaller Monthly PaymentsPay Smaller Monthly Payments
Priority DebtPriority Debt
• Taxes and Domestic Support Taxes and Domestic Support ObligationsObligations
Repaid at 100%Repaid at 100%
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
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%
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
SecuredSecured
• Regular MortgageRegular Mortgage
Paid direct at 100%Paid direct at 100%
SecuredSecured
• Regular MortgageRegular Mortgage
Paid direct at 100%Paid direct at 100%
• Mortgage ArrearagesMortgage Arrearages
Paid at 100% without interestPaid at 100% without interest
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
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
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
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
Executory ContractsExecutory Contracts
• All Executory ContractsAll Executory Contracts
Paid direct at 100%Paid direct at 100%
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
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
Excess IncomeExcess Income
Total Monthly Income Total Monthly Income
–– Reasonable ExpensesReasonable Expenses
= Excess Income= Excess Income
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
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
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
Co-Signed DebtCo-Signed Debt
• May be paid at May be paid at 100%100% in the Plan in the Plan
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
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
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
Bank AccountsBank Accounts
• Open a New Account Open a New Account BeforeBefore you File you File
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