It all depends on what type of plan you file, the equity in your property and whether you are above median income.
Many of Mr. Taieb’s clients have been successful with just cramming a truck down. This means paying the current replacement value of the truck plus Till interest, which is usually close to 5%. Thus, if you are fortunate, you can lower your truck payment by paying a Chapter 13 trustee while also getting the benefit of paying zero percent or nothing to your unsecured creditors. Thus, you are getting the benefits of Chapter 7, while also lowering your truck payment. Also, in the future if you truck breaks down, you can then convert or switch to Chapter 7 where you have no payments.
If on the other hand, you have non-exempt equity in your home, vehicle or other property, then your unsecured creditors will have to get paid the value of the non-exempt equity over the life of the Chapter 13 plan. Also, if you are above the median income, you will have to pay a percentage to your unsecured creditors based on the numbers in the means test.
The best news for clients who have to pay 100% of all their unsecured debt because of their equity, means test or substantial disposable income, is that for all cases filed after December 1, 2017, creditors now have 70 days to file a proof of claim after the petition date, since there was confusion using the 90 days from the meeting of creditors, which differed in different districts.
Thus, even if you have to pay 100% of your $50,000 debt back, but only $35,000 of debt file proof of claims, then you would be discharged of the other $15,000 once you pay off your plan. Thus, with the much quicker bar date, this could help clients who have to pay 100% of their debt back since creditors are bound by these guidelines.
If you have any questions concerning who gets paid or any other questions, feel free to contact me at 856-235-4994.
Steven N. Taieb, Esq. is here to help you and is a South Jersey Bankruptcy Attorney who has helped over 7000 people with their financial problems for the past 32 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.