Debtors Do Not Need to Pay Interest to Unsecured Creditors

Debtors Do Not Need to Pay Interest to Unsecured Creditors

| Jan 9, 2017 | Bankruptcy |

In the recent case of In re Egger, 2016 wL 6892747 (Bankr. W.D. Wash. 11/22/16), the court held that the debtors’ Chapter 13 Plan did not need to provide for interest to be paid to their unsecured creditors to satisfy Section 1325(b)(1)(A). In the Egger case, the trustee objected to the debtors’ plan because it was for less than 60 months and while it paid the unsecured creditors 100% of their claims, it did not provide for interest on those claims. The Chapter 13 trustee maintained that since the debtors’ budget showed they can afford to pay interest on the claims, they should be required to do so under Section 1325(b)(1)(A). The court overruled the trustee’s objection and found that Section 1325(b)(1)(A) does not require payment of interest on unsecured claims. Accordingly, the debtors’ plan was able to proceed to confirmation.

If you are considering filing for bankruptcy, please contact us. The firm of Laura Margulies & Associates, LLC has successfully handled thousands of cases in Maryland and Washington, D.C., many involving unique or novel issues. Please contact us today for a consultation at (301) 816-1600. Our website address is: www.law-margulies.com.