Checklist for Chapter 13 Plan Preparation

_____ Check to see the value and balances owed regarding  Debtor's  real and/or personal property.  Determine any non-exempt equity.

_____ Check for the payment status of the liens against real and personal property.  If Debtor is     current on the loan, you will list that creditor on 2. v., listing all secured claims that are not affected by this plan and to be paid outside of the plan by Debtor.  If Debtor is behind, then:

_____ Determine how many months Debtor is behind on mortgage and/or car payments and the     amount of each payment. If Debtor intends to keep the subject real or personal property, then this pre-petition arrearage amount must be paid through the Chapter 13 Plan in Equal  Monthly Payments ("EMP's").  Once you have determined the arrearage amount, list the   amount and creditor on Paragraph  2. ii. of the plan.

_____ Ascertain the identity of the creditor holding any liens against any real or personal     property the Debtor is surrendering.  If so, list this creditor,  the subject collateral, and         balance owed in paragraph 2. iv. of the plan.

_____ If you are attempting any lien strip or lien avoidance actions, you will need to list the name of the affected creditor,  the affected collateral, and balance owed in paragraph 3 of the plan.  Note: A motion is required separate and apart of this plan classification.

_____ Ascertain  if there are any outstanding property tax or judgment liens against the real   property.  Typically, these debts will be paid through the Chapter 13 plan in full at the designated legal rate of interest.  You will list these claims in paragraph 2. iii. of the plan.

_____ Ascertain whether there is any priority debt owed by the Debtor.  If priority debt is owed to the Internal Revenue Service or to the State of Maryland, determine for what year the tax debt is owed.  If the debt is priority, it will be listed in paragraph 2. d. of the plan or if the tax debt is reduced to a tax lien then you will list this debt in paragraph 2. iii. of the plan.

_____ Ascertain if the Debtor has any outstanding Domestic Support Obligations.  Any arrearage  must be paid through the plan.  The recipient of the support and the amount of the  arrearage will be listed on paragraph 2. a. of the plan.

_____ Any unpaid Debtor's attorney's fees are listed on paragraph 2. b. of the plan. 

_____ Determine how much unsecured, non-priority debt the Debtor has.  This type of debt

 will typically be paid back at some percentage less than 100%.  This is determined by the amount of any non-exempt equity, and/or the amount of disposable income the debtor has as determined by the Debtor's monthly budget (Schedules I & J) and/or the Debtor's Form 22 C Means Test.

_____ Once you have determined the amount of secured arrearages, the priority debt,  and any unsecured debt, you will need to calculate the plan payment.  Here is an example:

Secured Arrearages

Mortgage company $ 14,500.00

Car company                 500.00

Priority Debts:

Attorney Fee              3,500.00

Child Support             1,500.00

Unsecured Debt Total

Total unsecured debt     25,000.00

_____ Add up all secured arrearages and priority debts.  In our example that total is $ 20,000.00.  This amount is added to the percentage that is being paid back to the unsecured creditors.  This percentage is usually determined by ascertaining the non-exempt equity of the Debtor, so long as the Debtor's disposable income does not require a higher percentage be paid.  In our example, lets assume there is $10,000.00 of non-exempt equity.  This means we will be paying $10,000.00 towards the unsecured debt in this case which would equal a 40% payout.

_____ Take the total of the secured arrearages, priority debts and the unsecured payout and add  the 10% Trustee commission to calculate the plan base.  In our example the plan base is $ 33,000.00. You will take this amount, and divide it by the number of months of the plan. In a five year plan the Debtor's payments would be $550.00 per month

_____ Now that you have determined the plan payment amount, you must figure out the EMP's on all secured arrearage payments.  Frankly, you may be better off relying upon you software or Mr. Vetter's spread sheet.  To calculate this initially, take the plan payment,    and multiply it by 0.9.  This will give  you the amount remaining after the trustee has

taken their commission.

         In our example, we would now have to take a weighted average by calculating the per  creditor arrearage against the total arrearages:

             Mortgage arrears = $ 14,500.00

             Car arrears =                 500.00

             Total Arrears =          15,000.00

          In this example, the Mortgage Company would be entitled to receive 96.67 % of the after trustee commission plan payment, which is $495.00.  That means the mortgage arrears

 

                  EMP = arrearage/ (after trustee commission plan payment) X (the weighted average)

Mortgage EMP --- 4.500.00/ 478.50 = 30.3 months

So here, the EMP = $478.50 for payment over 30.3 months or 31 months

          In this example, the Car Company would be entitled to receive 3.33 % of the after   trustee commission plan payment, which is $495.00.  That means the car arrears                              EMP = Car EMP --- 500.00/ 16.50 = 30.3 months     

 

So here, the EMP = $16.50 for payment over 30.3 months or 31 months

Note: All EMP terms must be the same.  If not, then you have miscalculated.

Antonio Aquia

Belsky, Weinberg, & Horowitz, LLC

220 N. Liberty St.

Baltimore, MD 21201

410-234-0100

Aaquia@bwhlaw.com