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cortrightlaw
cortrightlaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 513
Experience:  Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
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California Ch. 13 Bankruptcy Questions: BACKGROUND: 1.

Customer Question

California Ch. 13 Bankruptcy Questions:

BACKGROUND:
1. Potential wages gross $80,000/yr
2. No personal or business assets
--no real prop; no car
-- <$3,000value of furniture
--no retirement $$;
--very little savings <3,000 (usually $$ scheduled to go to
living costs-rent/utilities/food/student loan/pers cc)
2. Closed business last year
---overall unsecured debt is ~$150,000-$200,000
---no secured debt

3. Business debt is all unsecured with most (not all) delinquent ~6-8 months
---2-3 unsecured creditors are seeking superior court judgment
…So worried about bank levy & wage garnishment
…Creditor #1 $27,000 unsec debt + $6700 atty fees (set for Case Mgmt
in a couple months)
…Creditor #2 ~$4,000 + atty fees (going to trial re: other named debtor
doesn’t owe this debt & has atty)
---I have been making minimum pmts to bank re: business credit line (10,000) and
business credit card (2500)
---I just started monthly IRS $600 pmts to IRS for income taxes owed ($10,000)
---Oher unsecured debt not actively collecting or is being sent to collections

4. Personal debt is current:
---student loans $150,000
---credit card debt $15,000

Question… My understanding is that Ch 13 Bk usually focuses on paying secured
debt in full as well as full pmt of other non-dischargeable debt such as student
loans/taxes….and usually unsecured debt is allotted only ~4% of total debt.
….Since I have decent income and no secured debt, if I enter into Ch 13,
will my unsecured debt % to be paid be higher than the 4-ish% (since
my potential annual income is decently high)… or will most of the unsecured
fall to the wayside and my student loans will be the focus of repayment
over 5 years?

Also, does the Ch. 13 have to be 5 years or can it be shorter (ie 3 years)…?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  cortrightlaw replied 2 years ago.

cortrightlaw : Give me a minute to review your question and respond
cortrightlaw :

Your chapter 13 payment will actually be determined by calculating your disposable income, this is the number that the trustee will want and it could pay anywhere between 0-100% of your unsecured debt back over a 36 or 60 month term.

cortrightlaw :

Income is determined by taking your gross and subtracting items like taxed, health insurance, standard deductions, then you take your allowable expenses such as house payment, car, utilities, food, etc and see what is left over and that is what the trustee will want.

cortrightlaw :

The IRS payment would have to be paid back at 100%

cortrightlaw :

Student loans could be deferred for the term of the bankruptcy

cortrightlaw :

Have I satisfactorily answered your question? If I have please remember to click the GREEN ACCEPT BUTTON so that I will receive credit and compensation for my time (doing so does not end our discussion), i will gladly clarify my response or respond to follow up questions if needed.

cortrightlaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 513
Experience: Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
cortrightlaw and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.

...I'd like your "best guess based on logic/legal-mind-set" response (obviously realizing that you could be anywhere between 0 to 100% wrong...): since the debt is primarily unsecured, then the repayment would likely be a much higher percentage.... e.g. 70-80% over 5 years cuz that's ~$20k /year....? Does this assumption seem likely to you...?

Customer: replied 2 years ago.

...did you see my clarification question...? I accepted the answer re: you instructed me to despite having additional question...:

 

...I'd like your "best guess based on logic/legal-mind-set" response (obviously realizing that you could be anywhere between 0 to 100% wrong...): since the debt is primarily unsecured, then the repayment would likely be a much higher percentage.... e.g. 70-80% over 5 years cuz that's ~$20k /year....? Does this assumption seem likely to you...?

Expert:  cortrightlaw replied 2 years ago.
It is hard to guess not knowing exactly your deductions from your check and your living expenses, the better way to figure out a rough estimate is to complete to of the bankruptcy schedules. Schedule I which is income and schedule J which is expenses, they are fairly easy forms to understand and complete. Then take the net from I and deduct the expenses on J and that should give you a rough idea of your disposable income/plan payment amount. Keep in mind that you also have to account for the IRS debt. You can google the forms and find examples.

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