Hybrid plan of Chapt 13 ...scared

[po man]

Ok Has anyone seen this...let me explain. A NC Office offers a Chapt 13 HYBRID plan. I was in an issue with my seperation agreement (says I am responsible for the house, wife could not even afford a payment , wife moved out because I would not share her with someone else). I got curious and started thinking about bk due to my debt. I spoke with my family law attorney and explained me not being able to sell, rent, or just get rid of the house and my thoughts of bk. I was just unable to keep the house. My attorney stated that if I filed my ex could sue me for breach of contract, the difference on the house, and any negative effect it had on her credit. I started freaking out. I then called my bk attorney and he said that if I filed this Chapt 13 Hybrid and listed her as a creditor, then she could not touch me. I have a full time job and own a side business, I make decent money. I passed the means test for chapt 7 (required for this plan). My thing is I have read alot on hear about what some chapt 13'ers are paying. The plan just says that you pay $199mo for 14 months. That will pay off the attorneys fees. Thats it! The paperwork says that you can pay off early,that is does the same thing as filing chapt 7, you just have to meet all the requirments. However, if something is screwed up, it will convert to a traditional chapt 13. Numbers seem jumbled and say I only have around 200mo disposable income. Just enough to make the 199mo payment in the plan. Which if all goes well and all is discharged, it seems that I will have 3-4k a month disposable. How are they doing this? I am scared that the trustee will figure something different and kick it back to a standard 13. Has anyone seen this, done this plan, or know anything about it? I am scared! Does anyone know what questions the Raleigh,NC trustees ask? Please give me some imput ... and let me know if you need more info.

[SinkingFast]

Have you perchance been talking to these people???

http://www.billsbills.com/debt_buster_overview.htm

Because this sounds like what you're talking about:

http://www.billsbills.com/Debt_Defeater_Benefits.htm

The DEBT-buster Plan??!!

You said the fee is $199/mo, but this firm shows that plan as being for people without regular income.

In researching, this is the only other website I found that refers to a Ch 13 hybrid:

http://www.myattys.net/PracticeAreas...Bankruptcy.asp

Are you perchance a "family farmer"??!!

Quite frankly, this whole Ch 13 Hybrid thing sounds like a cooked up scheme.

[po man]

No, I am not a farmer. I have a normal full time job and side business. Scheme or not, they are turning alot of clients. I have read a section under the new law that allows for plans to be less than 3-5 years. I have gone through my paperwork several times just to understand how they are getting this. It is somewhat understandable, but some how it is not paying anything to any creditor because I meet all the qualifications (pass means test for a 7, few things dealing with secured creditors, turning over all collateral except what to be paid outside the plan, etc.). I just fit into all these requirements. The attorney himself did tell me that I was one of the few people that the new helped. I am just scared after hearing what some of you guys are paying. I even asked if I could pay off early and was told yes, just wait a few months, $#@t I just wanted to pay it off upfront and walk away with no debt.

[SinkingFast]

I have read a section under the new law that allows for plans to be less than 3-5 years. I have gone through my paperwork several times just to understand how they are getting this.

Can you quote the BK Code Statute(s) here that they claim allows for this "Hybrid Ch 13"??

I too would like to know where they are getting this.

[po man]

I can't find one myself, I have searched everywhere. I think it is a standard 13 petition. This is what I am assuming... If you are to pay 0% to your unsecured creditors and you give up your secured property, except what is paid outside the plan, then the court is allowing this to pay your fees. So instead of dividing your fees, say 2800 over 3yrs and paying $77 a month. They allow you to pay 199 for 14mo since it is just the attornys fees, Therefore since the time of the plan is below the minimum of 3-5yrs, they may just call it a Hybrid. Thats a wild guess. I really dont care where they get it or what they call it as long as it works like this...lol. But knowing my luck... I just want to know more about it or talk to someone that has completed it. I am just going with the flow now, cross your fingers.

[lrprn]

My granny used to say that when something sounds too good to be true, most of the time it isn't true.

This sounds a lot like the pre-Oct 2005 "Chapter 20". File Ch 7 first to get rid of all the unsecured debts, then convert to Ch 13 to catch up on mortgage payments and other payments that weren't discharged in the Ch 7. Some bankruptcy districts still do allow this (perhaps yours is one of them?). Be aware that missing even one mortgage payment after filing the initial Ch 7 can cost you the ability to save your home through Ch 13. Also the new bk law allows a discharge in the subsequent 13 only when specified time has passed ( from http://www.moranlaw.net/chapter_13.htm )

I'm afraid I'm going to sound just like my mother, but here goes...."Just because everyone else is doing it doesn't mean it's right for you." I hope you will do a LOT more investigating and speak to 3-4 other bankruptcy lawyers in your area before signing up for something that seems so easy but could backfire big time if you don't understand all the long-term ramifications of what you are doing. Keep us posted on what you find out, ok?

[BK'd-Betty]

I saw a case like this at my 341 last year in New York - the reason it caught my attention was because the debtor was also being represented by my attorney AND the case was DISMISSED!

I remember telling my husband how uneasy I was being represented by an attorney that should have known better than to allow his client to come to a 341 with this scheme and then getting the case dismissed.

The poor woman (debtor), she was crying as she left the hearing room.

ETA: I never knew what exactly what it was they were trying to do until I read this.

[po man]

I understand what you are saying. My problem is I have to file a ch 13 to protect myself from a lawsuit with my ex, over the house. I can not keep the house, so they can have it. Had two trucks one lease (repo'ed the night before I filed) and one new purchase. I was letting go of the lease vehicle. Only keeping the new vehicle out of everything. Other than these three, everything else is unsecured loans. So the deficency on the house, old truck, and unsecured loans are what they will hopefully agree to discharge. I just need the protection that a ch 13 offers (obligations from ex spouse as to a seperation agreement...not a court order). I just wonder how this will effect a divorce. Thanks for all the suggestions and help.

[HHM]

My problem is I have to file a ch 13 to protect myself from a lawsuit with my ex

That is the whole part of the story that I am not sure is accurate. If the lawsuit is the result of your ex trying to enforce a divorce decree or domestic property settlement, the debt is simply non-dischargeable whether you file chapter 7 or 13. The only benefit of a 13 is that the debt owed to your ex becomes priority and still has to be paid over other debts, but you still have to pay (see Section 523(a)(15)).

Also, I think the big red flag with this deal is that your plan payments are ONLY paying your attorney fees to file this thing.

[po man]

Ok Let me explain a little more. I do not have my divorce yet, this is a seperation agreement only. The property was settled in the agreement. We do not have kids together and she is not entitled to alimony. The seperation agreement gave me the house, she could not afford it at all. I was being nice and took the other bills just because she could not afford them. I have made all the payments for about ten months and have gradually fell behind. She is on the loan to the house and I filed. Everything I have read relates to domestic support "child support or alimony" She does not get either one. This is only her being on the loan from the house in the seperation agreement, not a court order for me to pay her anything. Does this change anything in what you were saying? Do you think I am protected under a 13.

[HHM]

Opps, I quoted the wrong number, it is Section 523(a)(15), but here is what it says...

"to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph 5 (paragraph 5 is the child support/spousal support exception to discharge) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit."

I take it by the way you describe it, the so called separation agreement you have is merely informal (probably in writing, but informal nonetheless) and has not been signed off by any court, correct? If that is true, then you might be ok. But, I still think you will be hard pressed to get a trustee and a BK court to go along with sticking your spouse with the debt. When it comes to protecting innocent 3rd parties, the court's can and will get creative.

[po man]

Thanks for all the support...I thank you all.

First, two days ago I had talked ex wife into filing bk. This would solve all my problems with her sueing me and attorny's office knew it. Ex had the money and went to retain my same firm I have. To protect herself from the def on the house. My reason to her..lol. Anyway she gets there and the attorny's office talks her out of it....I was pissed. I called and had a few words for them too. They wanted her to wait and see if there was a def on the house first...after foreclosure. That meant I could not convert and would still have concerns of her coming after me, plus if trustee up'ed my payments and term, I would sink alot more money than needed into the bk.

Two days later...

Well after picking the diamonds out my XXX from the tention in the room, I finally had my 341 today. Last month was postponed due to ice/snow. I was way down the calender of cases and out of the first twelve cases heard, about nine were being motioned for dismissal. You talking about pucker factor...it was tight. Anyway, before my case was called i spoke with my attorney. Original plan was 199.00 for 14 months to cover attorney fee's. Three months into plan now. Attorney said that the credit union was saying a unsecured loan was a secured loan and the trustee was wanting the 199 for 14 mo and from 15 mo to 53 mo i was to pay 254.00. I said well I guess he will dismiss mine to for not accepting his plan. Later I was sitting there and realized I had paperwork with me that proved the loan was unsecured, not secured. When called, I answered about five questions and then the secured loan came up. I provided the document that showed unsecured, trustee looked at his paperwork and said basicly THEY, as in his office, had made a mistake. He then reverted back to our original plan of 199 X 14 months and said it was correct. Ever seen a HAPPY CAMPER, I got the Hybrid and got out of there. Amazingly everyone was smiling, you know I was. Check behind everyone...even the trustee...if you can, they are human too.

My only concern now is my taxes, I am wondering if he will let me keep them to replace equipment for my business if all I am paying is attorny fee's or will the money still go to unsecured creditors? Any thoughts?

[HHM]

Thank you for the update. It is always appreciated when someone comes back and lets us know how things "actually" went.

[po man]

Just found out my plan was CONFIRMED. Now I am requesting a payoff for the balance. Can you say happy.....

Scores are around 550 right now. Hoping they will go up after some work and discharge.

Thanks to all for the information and support.



Ok... the bad news. Wife and I are trying to work things out. Now I have to fix and pay for all that I screwed up...lol. But, its been better than when we were married.

[rrockinggramma]

why not have her go to another attorney and file her own chapter 7. Then you both can have a fresh start. . . .