I settled my claim in my former mortgage company's chapter 11 case

[womanonfire]

I filed the claim for a million because, why not? lol. I settled it for 50k. I have two questions that I want to run by you all before I ask my own attorney because I honestly do not want to pay them any more money.

I am a 100% plan. Will I be forced to pay off my BK early? There is a clear advantage to that to being over and done and moving on but what other advantages are there such as tax advantages that I might not be aware of?

Secondly, and this is a question that probably no one can answer but I'm going to ask anyway... In the mortgage co. BK, they put aside 10 mil for consumer creditors. This was in 2019. These funds are accruing interest. Does the accumulating interest raise the amount to be paid out to consumer creditors? Right now, I am worried that because of the total amount of the claims, 10 mil is not enough.

[justbroke]

No. In a 100% plan you promise to pay 100% over the life of the plan. Inheritances and other windfalls should not matter. Your attorney may nudge you and say "pay early" but I would say, maybe, pay 25% of that into the bankruptcy (to finish early), and keep yourself a good solid rainy-day fund.

How a liquidation works for a big business is based on what the Trustee or receiver decides to do with the assets. Of course secured creditors and governmental entities usually have priority. The fact that they have enough assets to pay "something" into the consumer pool is interesting. I would think there would hardly be anything left (scraps) for the unsecured creditors.

Oh, it's a Chapter 11, so it's a reorganization. I suppose the pool for consumer creditors is related to consumer-based lawsuits for which the company may be liable. Again, the receiver or trustee may be charged with arranged the classes of creditor and determining what money will go where.

[womanonfire]

Oh, it's a Chapter 11, so it's a reorganization. I suppose the pool for consumer creditors is related to consumer-based lawsuits for which the company may be liable. Again, the receiver or trustee may be charged with arranged the classes of creditor and determining what money will go where.

So in this particular case, A Consumer Creditors’ Committee was appointed by the United States Trustee to represent the interest of consumer borrowers. The Committee negotiated a settlement with the companies that sets aside money (10 million) to pay allowed legal claims against Ditech and RMS. Under the settlement the Committee also appointed a Consumer Representative/Claims Trustee to review all the claims filed by consumer borrowers and to help consumer borrowers in fixing Ditech and RMS account mistakes. http://ditech-settlement.com/

A motion was filed for my case to reduce the amount to 50k and approve it. I am not objecting because this is what we negotiated.

I think I agree that I should invest the money instead of paying off early and it is good to know that I have that option being in a 100% plan! Thanks!

[justbroke]

Understood. Smart by the Trustee to appoint a committee to represent the (very likely) underrepresented unsecured class (such as consumers). There is a bunch of voting that happens in large Chapter 11s -- the reason they are so complex -- and the creditors are grouped into classes. At least that's my understanding when I was looking at a Chapter 11 for myself.

[despritfreya]

Unless you have an Order to abandon, this claim is property of your bk estate regardless of whether or not you are a 100% Plan. If the asset was not abandoned, I tend to doubt that you have the authority to settle anything without obtaining the blessing of your bankruptcy judge. Did you discuss this issue with your attny?

Des.

[justbroke]

I didn't even consider what Des wrote. I assumed it was an asset that was listed in the schedules and that the Chapter 13 trustee already knew about this. I assumed the suit arose pre-petition and it was clear in the SoFA and scheduled.

[flashoflight]

I ran into this issue with my own adversary and we foresaw it prior to filing the complaint. I'm not at liberty to talk about how I dealt with it. But des is right that it is a problem and you should expect to turn over the money to the trustee unless you and your lawyer work it out.

[womanonfire]

Unless you have an Order to abandon, this claim is property of your bk estate regardless of whether or not you are a 100% Plan. If the asset was not abandoned, I tend to doubt that you have the authority to settle anything without obtaining the blessing of your bankruptcy judge. Did you discuss this issue with your attny?

Des.

The consumer creditor was given the authority to settle with me and other consumers, as well as to object to claims. We agreed on 50k. She filed a motion to allow my claim, the Judge will sign off on it if there are no objections.

My BK attorney has nothing to do with this but he is aware of it. As I explained, I have not asked him what will happen with the settlement money yet, I am asking here first.

I was also told that it still may be a couple of years until I receive any money at all. There were around 5600 consumer claims filed. Objections or motions to allow claims were filed in approximately 5500 claims now. There are around 230 claims outstanding from consumer creditors that objected to their motions to have their claims expunged and those have to be resolved as well.

At the end of the day, I am confident that I can't be forced to pay more than what I owe and I am paying 100% right now.

[womanonfire]

I didn't even consider what Des wrote. I assumed it was an asset that was listed in the schedules and that the Chapter 13 trustee already knew about this. I assumed the suit arose pre-petition and it was clear in the SoFA and scheduled.

All of that is correct, the amount of all my claims were listed as unknown because at the time of filing, it was unknown.

[womanonfire]

I ran into this issue with my own adversary and we foresaw it prior to filing the complaint. I'm not at liberty to talk about how I dealt with it. But des is right that it is a problem and you should expect to turn over the money to the trustee unless you and your lawyer work it out.

You were not paying 100% in your plan as I recall so in your case, I imagine it was a problem. In my case, if I am forced to pay off my plan early, then so be it. Right now, I owe only $57,710. That is not a bad thing either. Here are the pros I see:

I can start rebuilding credit faster and I will have an extra 2k every month in the budget to invest which is exactly what I plan to do. It is weird, but I really dig the rigid structure and strictness of a budget. This bk was a blessing; I'm saving money on interest paid to the IRS and I got rid of a lot of debt simply by having creditors not file claims. I am also able to save a little money each month as it is.

des Do you have any case law where an trustee and an attorney duked it out over a similar situation?

[Carmella]

Interesting scenario! If you don't have to pay it to the BK/trustee I think I would be tempted to make extra payment to get out quicker, but then I would be tempted just to bank it and use the money for whatever I needed, but not spend frivolously if that makes sense.

[womanonfire]

Interesting scenario! If you don't have to pay it to the BK/trustee I think I would be tempted to make extra payment to get out quicker, but then I would be tempted just to bank it and use the money for whatever I needed, but not spend frivolously if that makes sense.

It's not a bad situation to be in either way for sure.

I thought this case was interesting even if it is older and it involves life insurance: https://cite.case.law/br/510/409/

[flashoflight]

You were not paying 100% in your plan as I recall so in your case, I imagine it was a problem. In my case, if I am forced to pay off my plan early, then so be it. Right now, I owe only $57,710. That is not a bad thing either. Here are the pros I see:

I can start rebuilding credit faster and I will have an extra 2k every month in the budget to invest which is exactly what I plan to do. It is weird, but I really dig the rigid structure and strictness of a budget. This bk was a blessing; I'm saving money on interest paid to the IRS and I got rid of a lot of debt simply by having creditors not file claims. I am also able to save a little money each month as it is.

I have a 1% case so it was a problem.