You can calculate your unsecured creditor payment in chapter 13. This is the gist of your case. Your plan of reorganization is characterized by the percentage that this class of creditors will receive. When I talk with the chapter 13 trustee about your plan it is described as the percentage to be paid to unsecured creditors. It can be a:
- Zero percent plan in which unsecured creditors receive exactly that, nothing.
- 100% plan in which your unsecured receive the full amount they claim.
- Any percentage in between
Exactly how is the percentage to be paid to unsecured creditors determined?
Forgive me, but for the start of the discussion I am gong to hide behind my computer. Attorneys now use bankruptcy preparation software. I choose to use BestCase. To insure that I have the best chance of accuracy preparing your chapter 13 plan, I pay extra to subscribe to their Chapter 13 plan module. Most lawyers I know do not go this extra mile. I enter a proposed plan payment and duration, and the module analyzes the rest of your data, including your means test disposable income and yields a percentage for unsecured creditors.
I still need to double check those numbers to be sure that the calculated percentage takes into account any lump sum amounts which might not be exempt under Ohio law, and which must be part of the unsecured creditor payment. For this I resort to old fashioned high school math.
You need to calculate a percentage from a fraction. You simply divide the top number by the bottom number. I remember it like this: the big number goes into the little number. For example one fourth is one divided by four. The answer is .25. That is twenty five hundredths or 25%. That is how you calculate the percentage your unsecured creditors get in you chapter 13 case. You divide the amount you have available to pay them over the life of the plan by the total of unsecured debt. That gives the percentage that the unsecured creditors will receive over the life of the plan.
In your chapter 13 case, creditors who are not secured are represented by the chapter 13 trustee. The amount of the unsecured creditor payment critically important to him fulfilling the role assigned to him by law. I bet you were like me when you sat in high school just knowing you were wasting time because you would never need the math they taught. There is a place for everything in this world, even math.