Beware! Here's A Tip

[drednm]

I have paid off my CH 13.... What I discovered was that in the 2 years we wrangled over my payments, my total debt was listed as 107K even though I argued that there were obvious duplications and errors in the accounting. My monthly payment was ridiculous because of the 107K figure. After 2 years I finally got confirmed and cashed out a 401K to pay them off..... The actual payoff figure, after CH 13 auditor went through is (and this took more than 6 months) was 38K because of the duplications, errors, and one company that filed late..... QUITE THE DIFFERENCE.... and there I was paying in almost 60% of my takehome pay because of their stupidity.

CH 13 trustee and judge wouldn't listen to me when I told them the figures were wrong. The stupid lawyer I had didn't do anything. A huge hassle and hardship for NOTHING.

[HHM]

Well, how about some clarification...

Your chapter 13 payment is NOT based on how much debt you have (at least not directly). Your chapter 13 payment is based on 2 main factors:

1. Amount of your monthly disposable income (in fact, that is the main criteria because the BK law requires you to devote ALL of your disposable income to a chapter 13 plan.
2. Liquidation value of the BK estate. Which means, your creditors must receive at least as much as they would receive if your estate was liquidated and all non-exempt assets were sold to satisfy your debt.

Factor 1, disposable income, sets the maximum amount of your plan, as it is the maximum amount you can afford.
Factor 2, liquidation value, sets the minimum amount the plan must provide.

If your disposable income is less than the liquidation value, then you cannot file chapter 13.

Above, I said the amount of debt you have does not "directly" affect how much you pay, and this is what I mean...(1) the amount of unsecured debt is NEVER a factor because it is the lowest priority debt in a chapter 13. (2) Secured debts and priority debts can create some problems if you have very low disposable income. For example, if you have mortgage arrears (i.e. accumulated missed payments) and plan on keeping your house, you MUST pay those arrears in the plan...or, if you owe nondischargeable IRS debt, you must have at least that amount of money going into your plan. If you do not, then you cannot file chapter 13.

Also, generally speaking it is NEVER advisable to cash out a 401K to pay off a chapter 13.

The only way mistakes and duplications in creditor claims becomes an issue is determining the length of plan. If you have substantial disposable income such that it would take you less than 60 months to pay back 100% to creditors, then you need to be on top of challenging duplicate and inaccurate claims made by creditors.

[drednm]

it was explained to me that I was paying off 100% therefore the disposable income was the battleground in order to pay off the bogus figure within 5 years. No matter how I argued the figure was WRONG no one paid any attention.... total bull shit.

I just wanted this over with and these idots (lawyer included) off my back and out of my life. It was worth whatever loss I tokk on 401K and IRS...

Plus the lingering BK was jeopardizing my job (I have a security clearance)....

Bottom line is the TOTAL amount should have been corrected and accurate YEARS ago... But the system proceeded despite my pointing out they were WRONG by about 70K.... So who's accountable and responsible?

My partner (also paid off) received a REFUND for $5,500 after his plan was completed and closed. I think it's the way they do business and a way to keep you in the system LONGER than you need to be....

Can anyone spell I N E P T ?

The system is obviously BROKEN....

[CindyLou]

yes, you are correct, in a 100% payoff plan your monthly payment is directly related to the amount of your debt! the way to get around paying more than you have it is that the confirmation hearing should always be continued until after the deadline for creditors to file claims. ...this the KEY to filing a 13 with 100% payback. Then once the claims are in a checks and balance should be done by the debtor or the debors attorney prior to the confirmation hearing. Did the trustee actaully confirm the larger number? Was you plan confirmed before your deadline for claims?

[MaryAnn]

I just wanted this over with and these idots (lawyer included) off my back and out of my life. It was worth whatever loss I tokk on 401K and IRS...

Plus the lingering BK was jeopardizing my job (I have a security clearance)....

Hmmmm......I doubt it. Cashed out 401k money can never be recouped. It's gone. The taxes, penalties, free money from your employer.

[drednm]

My confirmation took 2.5 years!! No one ever changed anything in the 107K that was listed against me even though it was wrong.... so of COURSE they hammered me for the max payment (1,708/month) based on that figure for 5 years.

I tried over and over to point out that they created a hardship for me my NOT correcting the damned total claims even though one had filed late (and was dismissed at the audit) and several were DUPLICATIONS (one to the very PENNY).... Only when they finally audited the account (it took six months) did they come up with a correct final claim amount, 70K less than the one originally posted.....

The system obviously does NOT work.....

[HHM]

This situation just seems so odd...because it is such a simple matter to object to claims filed by a creditor.

All the debtor has to do is file an "Objection to Claim" and especially in the situation with duplicate claims, that Objection is about 2-3 pages...the creditors usually don't respond, and the Motion is granted. And if they do respond, if the claim is truly a duplicate, then you will win the motion at hearing.

No offense, I get the sense that there is something more underlying this case that your not telling us about. (Or, to give you the benefit of the doubt, maybe you had a really bad attorney).

[drednm]

I had a lousy attorney.... I did NOTHING.... After 2 years I finally started SCREAMING at him to get the damned case confirmed.... agree to any conditions because I was gonna pay the sucker off immediately....He finally met with CH 13 trustee and got it confiemed last August.... I got my audited payoff figure in March....The attorney and his paralegal consistently ignored me about the obvious errors and told me they'd me cleared up at the audit.... of course in the meantime I was paying through the nose FOR NO REASON....

In any case IT IS OVER AND DONE WITH.... But I think it's an important issue: FILE OBJECTIONS TO CLAIMS as soon as they become obvious....

The stupid attorney never wanted to "rock the boat" or have to amend paperwork we filed.... even when I found ERRORS..... GRRRRRR

[HHM]

Sorry to hear about your situation. It sux.

With regard to disputing "amounts", that can be a little more tricky because you need to have some evidence that the amount claimed is, in fact, an error. But, you should still file Objections to Claims, because the great thing is, the creditors "rarely" respond and if they fail to respond, you win by default. I can't tell you how many pay-day loans, ridiculously overcharged collection accounts etc, I have seen kicked out of the 13 (meaning, having the claim denied, and therefore it gets discharged) by simply filing an objection to claim and having the creditor not respond.

[drednm]

Well I agree but I had a loousy attorney who was immovable in part because he just didn't understand the process and avoided anything that required filing new paperwork.... plus I had no "proof" (as you say) but the errors were obvious to anone who ever looked at the claims.... I mean PLEASE.... two claims by Citibank for EXACTLY the same amount of money and with the same account number???

The system SUX..... but at least I'm out of it... unless there are more surprises....