Question 2yrs into payment plan, end of my rope help!

[Hopeandpain2]

Hi, this may be long and I apologize. I am typing this on my phone so I apologize for the formatting.
my husband and I are in a chapter 13 36 month plan and have only 12 months to go. We have been asking our lawyer about the Haven Act (we collect va disability) he says that it isn’t used in a chapter 13. We were under the limits for doing a chapter 7 however we needed to save our car and house. We just paid off all secured debts and now just paying basically pennies to all of our other debts.
My lawyer is saying we need to pay him $4000 more to talk about “options” and we might have to do a 5yr plan!?
I have researched this till my eyes are crossed and it specifically says disposable income and Va disability is not to be included. So there for, we should not have included it in our payment plan.
we filed October 4,2019
payment plan 635
income 6000 with Va
income 4000 w/o Va
monthly “bills” 6180 (yep if it wasn’t for the stimulus and such we would be screwed)
we have paid close to 18,000 including tax returns. We have paid our “secured debts” and now just paying the pennies to unsecured.
from the very beginning I asked my lawyer about the Va payment and when the bill was passed he said it didn’t apply to us and the trustee confirmed. How was this confirmed? I am so angry I can’t see straight. I have called other lawyers and no one will talk to me, I just want a answers, I have called the trustee’s office and left three voicemails and not one returned call.
we can NOT afford a new lawyer and can’t afford to pay ours again. We have one car that desperately needs tires (they are 6yrs old) and to have its 100,000 service. Our kids need glasses. Our appliances are breaking (washer, freezer and just yesterday the dishwasher) there is more over the past 2 years.
What should I do? Can anyone give me a direction? Who should I talk to?
thank you for reading.

[Zombie13]

Hi @Hopeandpain2.
Yes that is very frustrating. Why, is the attorney saying, you *may* need to switch to a 5 year plan? Have you received a letter from the court or trustee stating an intent to raise the payment? Or, Is the attorney recommending a 5 year plan in order to ease the monthly payments? If you had to work with the attorney, and they know your situtation, could you negotiate a payment plan with them? For example, consider rolling a portion of their fees into the plan, and you could pay them the remainder in monthly installments after the plan is over? Also, check if your employer offers legal benefit insurance. You may be able to save a significant amount of money. I think we paid $250 or so to file. This is 'benefit enrollment season', so now's the time to get it for 2022, if it's offered.
As for appliances, eyeglasses, car repairs... yep, we get it! Oh man do we get it. RE: tires - one suggestion, not ideal, is to replace two tires at a time, and lower cost ones, but be more aware/drive more carefully I guess, since they may not work as well in rain, braking distance is longer, etc. compared to the higher performance ones.
I sincerely hope you can get this sorted. And, I tell myself this often... Just Breathe (and if you have to blow off steam... demolish something that is no longer useful!) .

[flashoflight]

Here is my educated guess: You don't have to use the VA income, but you might make too little to fund the chapter 13 plan if you take out the VA income. If that's the case, it doesn't matter if the money is VA. For example, there is a best interest of the creditors test where the 13 creditors have to get as much as they would receive in a 7. That usually pops up if there is non-exempt property such as excess equity in cars and houses. So if you convert to a 7, you'd still have to pay the unsecured creditors in a lump sum or a very short payment plan for the value of the house and car that exceeds exemption at the time you originally filed.

You need to find out from your attorney why the unsecured creditors have a dividend from a below-median debtor like yourself. Asking these questions to the trustee's office is not the correct solution because you are represented by counsel and the trustee is an adversary to your case that is working on behalf of your creditors to maximize the dividend from you.

If you stay in the 13 on the original 36 month plan (I would't pay extra legal fees to modify plan to 60 months), you need consider aggressive cost-cutting moves to make it to the end. To me, the dishwasher is an optional appliance and doesn't need to be replaced anytime soon. Wash from the sink. Dishwashers are not a thing even in richer Asian countries. Eyeglasses can be purchased for $20 from Zenni. Why do you have a separate freezer vs. a typical refrigerator? As far as auto service, you follow the owner's manual for must-do maintenance items a-la-carte and don't do extras in the 60k/90k menu from the repair shop. Tires can be replaced with $50 new Chinese tires to get to the end of the 13 but get a 4-wheel alignment from Groupon if the tire wear is uneven. Get a landlord washer to gut it through, not the latest and greatest model.

[despritfreya]

The below analysis relates to Chapter 13 only.

I believe the Haven Act became effective as of August 23, 2019. You filed in October, 2019 therefore, assuming I got the correct effective date, you would not include VA income as part of your “current monthly income” for the Means Test, similar to the non-inclusion of SS. HOWEVER, including the VA income on Schedule I is a different matter and is specific to your jurisdiction. Fortunately, you are in the 9th Circuit.

In the 9th Circuit, SS income does not need to be included on Schedule I when filing Chapter 13. See In re Welsh (9th Cir. 2013) and In re Adinolfi (9th Cir. BAP, 2016) (Sorry, don’t have actual cites at the moment.) I do not know if there are any cases that specifically apply these cases to VA benefits, however, the reasoning in these cases would be the same when looking at VA benefits. I believe that since you filed after the enactment of the Haven Act, you can take advantage of it. BUT, since I do not know anything about your case, I do not know if removing the benefits from your “disposable” income on Schedule I will create a problem in Plan funding.

In many cases, while benefits from SS are not required, utilizing such income is needed to support the Plan payment. If, without adding such income to Schedule I, you no longer can produce sufficient funding to comply with either Chapter 7 Reconciliation or fund some other items such as paying mortgage arrears, priority taxes, etc, then the Plan fails.

As to the additional cost in legal fees, pull out your fee agreement and read it. It should tell you what is and is not covered. For example, my firm charges hourly. If I have to go back in after the Plan is Confirmed and file a Modified Plan, I add my fees to the Order Confirming the Modified Plan. I rarely ask a client to fund the additional work outside the Plan for such matters.

The bankruptcy court in your State has a pro se bankruptcy clinic. The State Bar also has a program that may be of assistance. Check them out:

https://www.wawb.uscourts.gov/filing-without-attorney-2

http://www.kcba.org/For-the-Public/Free-Legal-Assistance/Neighborhood-Legal-Clinics

Des.

[justbroke]

Here is my educated guess: You don't have to use the VA income, but you might make too little to fund the chapter 13 plan if you take out the VA income.

This.

A Chapter 13 is voluntary. You can voluntarily contribute exempt income in order to fund a Chapter 13 to protect your property interests. It's that simple. The reason that a "under-the-median" income Chapter 13 filer extends beyond 36 months, is exactly to stretch the payments out over a longer period of time and get the benefit of a "lower" payment. Such under-the-median income filer is allowed to propose any plan length so long as it's at least 36 months and less than (or equal to) 60 months.

flashoflight has given a great explanation of some of the issues and despritfreya has given a great explanation of how the Haven Act and exemption of $$$ usually work.

[flashoflight]

The other possibility is that you stretched your I&J to pay the arrears and with the way the math worked out, you paid 24 months to the arrears and there is a dividend to the unsecured creditors. You could redo the I&J, but you would incur legal fees of $1k-$2k and have less than 12 months to pay the new legal fees off to stay within the original 36 month plan. It takes 2-3 months to get things done in court. At 9-10 months left, I'd just finish it rather than go to extra innings.

[Hopeandpain2]

Thank you all, I can’t figure out how to reply to you all. I will try my best to on here. I think my lawyer was trying to discourage me and not adding extra work for him? We were in a hurry to file so I talked to two before and they said I should file a 7 ( and not save the house and car)
our income did not support a 635$ payment, but I figured they all knew best. We were behind on the car 2 months and we owed 7000 and a few months ago we paid it off and got the title. The house, we were caught up only a month behind. We paid October 1st through the bank (sent off the payment) and we filed October 4th the mortgage got our payment the next day. So they said we were behind and didn’t pay. No one will tell me where that payment is. And added for stupid bankruptcy attorney fees for them and that “missing” payment we owned $3000 to them and on our statement it show we own another 1400 on top of our monthly payment. We pay the mortgage outside of plan. I have asked where and why that payment is missing and why we have to pay so much all I get is we will talk about it when you are close to being finished.
we had no problem with the 13 and paying instead of the 7, but if something was done wrong, we need to know. This situation is something we never want to be in again but my husband need to raise his disability (80% hopefully to 90/100%) but has been scared the trustee will take the extra.
I have asked if we could take a tsp loan for the car repair and bare minimum for what we need and provide receipts and write statements saying we need this. His reply was “the trustee doesn’t allow loans of any kind without permission. My hourly rate and other fees would be included, which may extend the plan” um,ok not worth the $1000 loan.
We also have a life insurance/ savings account we pay 15$ for the life insurance and 50$ to the savings. It’s a tax deferred account is that considered a loan? It’s our money and at the time we filed it had 5$ in it because we used the money for bills. Now it has 1300, we don’t sign a agreement or anything saying it is a loan, however the tax we pay during tax time (usually 10-15$) does anyone have any experience with something like that?
thank you again for explaining and talking me down from the ledge, so to speak.

[flashoflight]

With the large amount of unsecured debt you are going to discharge in less than a year, this 13 will be worth it. The struggle you are going through is the pay to play part of the process. If you managed to get this far and get your secured and priority debts paid off, you can make it to the end.

As far as the mortgage, all mortgage lenders will add a bunch of legal fees due for the work they need to do in conjunction with the 13. It doesn't matter if you were current, 1 month behind or 18 months behind. If you complain, the lender may do more legal research and bill you for it on your mortgage balance. There is a process at month 36 where the trustee will help you reconcile the mortgage balance but expect the balance to be higher by $1k or so but it could be more. Again, this is the pay to play part of the process. That's why you get the line from your attorney to deal with the mortgage at the end. Totally expected. Be patient and let the process work itself out in a year. I didn't like this process either so I refinanced during the 13 to bail out of this and agreed to pay all of the extra junk fees as part of the refi. I incurred legal fees of $2.5k in the process of the refi for the motion to modify plan and the motion to refinance.

It costs money to change your plan because generally post-confirmation work is not included in the no-look fee. See your retainer to figure out what's included and more importantly, what's not included. It is quite standard for the changes you are seeking to cost $1k-$2k. Generally all you get between confirmation and the last few weeks of the case is monitoring for any new filings in your docket like motions to dismiss from the trustee but it includes no work like responding to the TMD. So I would not be surprised if the lawyer doesn't want to spend substantial time on you for free until month 36. The TSP loan would cost extra legal fees for the motion to incur debt. As far as the savings account, it's just a quick yes/no question. Shouldn't cost you extra for that yes/no answer.

[Carmella]

I hate to say it because I know it's not easy. But if you can struggle through and yes it does stink beyond belief do it and get through it so it's behind you.

We have no car now and have to try to get financing and go through the court in our case it only will cost us $350, but I think anytime you try to change anything it will cost something. And if your income increases more the trustee probably will want a higher payment since you are not 100% payback.

Sending good thoughts and prayers your way. I know it's so stressful, but it will end. My dryer is on it's last leg. Now the washer is making noise. I can't do anything to replace them. It's a struggle for us to pay income tax and now property taxes. We have the 1st mortgage paid off, but still that money is just gobbled up in expenses since they go up. I thought I would have extra once we didn't have the house payment, but really it just goes to property and income taxes. We have finally after more than 3 yrs been able to save up a little (maybe $500), but soon as there's an expense it's gone.

We had a leaky toilet for so long I was embarrassed, but had to wait it out and collect water in a bucket in the basement. The stimulus helped us get that repair. We also had bad tires much longer than we should have (they were bald in the snow) and the stimulus also helped pay for those as well as new brakes. And now that car was just totaled. We waited too long for glasses. My husband almost didn't pass his driver's license vision test. I have pain from dental problems. Now I am finally starting on that. But I need probably 3 extractions, a bridge and an implant or root canal. I will have one maybe two extractions (luckily one back tooth the dentist says doesn't need replaced because it's not really used in chewing and I do have a smaller than average mouth) and a very old filling that needs repaired. This will be in prep for a bridge. I really sucks being in the Chapter 13 for a lot of us. But it is also our saving grace to get rid of debt and to keep the house.

I guess I am trying to say you are definitely NOT ALONE.

Try to stick it out for the next year. I know it's so easy to stay and so frustrating and depressing to do.

Focus on the good things you have in your life when you start feeling that it's too terrible to bear.

[womanonfire]

As far as the mortgage, all mortgage lenders will add a bunch of legal fees due for the work they need to do in conjunction with the 13. It doesn't matter if you were current, 1 month behind or 18 months behind. If you complain, the lender may do more legal research and bill you for it on your mortgage balance. There is a process at month 36 where the trustee will help you reconcile the mortgage balance but expect the balance to be higher by $1k or so but it could be more. Again, this is the pay to play part of the process. That's why you get the line from your attorney to deal with the mortgage at the end. Totally expected. Be patient and let the process work itself out in a year. I didn't like this process either so I refinanced during the 13 to bail out of this and agreed to pay all of the extra junk fees as part of the refi. I incurred legal fees of $2.5k in the process of the refi for the motion to modify plan and the motion to refinance.

So you paid more to refi than the servicer was charging in fees?

I am not sure why more people do not use the qualified written request and request for information under RESPA to figure out the fees and dispute them. They can not charge you a penny to research any of this if they do, they violate RESPA.

Here is a case on this: https://www.ncbrc.org/blog/2018/08/0...g-delinquency/

[flashoflight]

So you paid more to refi than the servicer was charging in fees?

I am not sure why more people do not use the qualified written request and request for information under RESPA to figure out the fees and dispute them. They can not charge you a penny to research any of this if they do, they violate RESPA.

Here is a case on this: https://www.ncbrc.org/blog/2018/08/0...g-delinquency/

Not exactly. The interest rate on both of the pre-petition mortgages were much higher and one of them was adjustable as well. The HELOC was going from minimum payment to full amortized payment as well while in the 13, which could be fatal to making 13 plan payments.. I changed both to a single loan 2.25% fixed. Finally, I ended up with a completely clean mortgage that is free from any delinquency or bankruptcy baggage where online access and monthly statements are the norm again.

I did send the QWR to both lenders certified return receipt. Neither sent me or my lawyer any reply. Probably using the automatic stay as an excuse even though I gave a limited waiver for it. Eventually one of the lenders sent me a complete accounting of the mortgage and it was way too cryptic to figure out even though I had taken several accounting classes in college. I'm sure the statement was designed to obfuscate as well. At some point, I have to decide whether to cut my losses in terms of time, more mortgage junk fees, and potential added legal fees. I have a family, a day job, and don't have a big slush fund for legal fees. I'm not doing this in pro per. I was through wasting time trying to deal with the mortgage junk fees. We're talking about $1k in extra junk fees, not $20k.

The chapter 13 gave me the rare option to refinance without regards to pre-petition credit issues and I took that gift horse. Surprisingly, all of the unpaid late fees that appeared in the proof of claim disappeared on the payoff when the one of the loans got sold. It's not for me to ask questions when there is a bank error in my favor.

[womanonfire]

Good to know! And that link I posted was not a good example. Need to find a better one for others. Thanks for sharing you story!