Expert: Terry Leeders - 11/2/2007

Question
QUESTION: Hello and thank you for answering my question.
I would like to file a Chapter 13 to repay the arrearages on my home and to avoid foreclosure. I have no credit card debt or car note payments. I am in grad school and my student loans are in deferment.I have sufficient income from child support and have a part time job with no benefits, I get paid cash every week. I've owned my home since 2003,had not worked since 2002 until I got the job that I have now. I have been told that my Student Loans must be included in my Chap 13 for repayment even though they are on an in school deferment, and I am not in default. How is it that if I owe less than 15,000, total bills, why do I have  to pay over 45000 to the trustee. my payment to the trustee will be 775 for 5 years.
I am a full time student.

ANSWER: Hi Patrisha
Your payment is designed to pay back enough debt to protect the assets you do have.  Also, the court looks at disposable monthly income, you have to commit all disposable income to the case  (whats left after your monthly necessities)
You sound like you have already filed, so you should discuss the plan with your attorney for specific reasons.

---------- FOLLOW-UP ----------

QUESTION: Hi, and Thank You again for your time.
I have not filed yet, because I don't understand the payment structure and it appears set up for me to fail.
Again I owe less than 15000 in mortgage arrearages and additional bills I have no equity in my home. Where does the additional 30000 go and why am I paying  student loan debt before it is due?
Thanks

Answer
A chapter 13 has to pay a minimum of 10% to the unsecureds.
Your monthly income and expenses dictates the exact amount of the payment.  You have to pay your case within a maximum amount of 60 months.  Your trustee gets a % to process the case, between 5-10% based on your jurisdiction.  Your attorneys fees may be added into the plan amount too.
There are many other factors that may dictate your plan payment and % so speak with your attorney on the reasoning behind them.  Keep in mind, whatever portion of your student loan that doesn't get paid in the case will remain afterwards.