ARM Increase + BK = Confusion

[2bclear]

Hi Everyone,

I apologize ahead of time for my lengthy post and the fact I originally posted this as a reply to a thread relating to the same subject but later realized that the related thread was a few months old!

So, here goes:

We are in a similar situation with an ARM that is going up. We filed a Chapter 13 in 7/07 and our plan was confirmed in 9/07. Just when we were getting used to the budget and the wage garnishments and a practical lifestyle (for example, we surrendered our expensive car and got a used and MUCH more practical car with the Trustee's blessing and are living within our means for the first time in 13 years!) we received a letter from our 1st mortage co. (our second is fixed) indicating that our payment will increase by $1,000 in 12/07 and it will again be reviewed in 6/08.

For the record, we filed the Chapter 13 in order to keep our home since my husband's company lost a big contract and he was basically a non wage earning self-employed business owner. We always planned to refi before the first interest adjustment but life got a hold of us (living way beyond our means) and before we knew it our debt to income was so backwards we couldn't find any lender to refi us. Anyhow, he got a job outside the home (I also work full time) and we joined the Chapter 13 club.

I keep reading about people have to file an amended plan and/or getting a notice from the Trustee re: an increased plan payment, after they have had their ARM increase, but this has me perplexed. When we filed we asked our attorney about the possibility of our ARM adjusting and were told that our plan was being filed using the current mortgage payment and that any increase in payment would have to come from another budgeted area within the plan.

1) Are we supposed to notify our attorney and/or the Trustee of the up and coming increase? Won't the mortgage company notify them? We are both looking for additional ways to supplement our income and can both put in overtime to make up the $1k that we need each month, but I am a bit confused as to our obligations under the BK.

2) If we can figure out a way to pay the increase along with our other obligations under the plan (trustee payment, two car payments, second mortgage) do we need to file an amended plan? Or, will the increased income force us to do so anyhow?

We live in Oregon. Can someone shed some light on this situation?

Thanks

[rrockinggramma]

sounds like your attorney is telling you that the mortgage increase would be up to you to cover. a 1000? wow that is a huge increase. You might want to let your attorney know anyway about the size of this increase unless you already anticpated it to be this large when you mentioned it to your attorney. He might be able to shuffle some things around to allow for such a huge increase. It makes me glad now that I rent. Holy cow!

[CindyLou]

how much is your total 13 payment? how much is going to unsecureds? maybe with you increased mortgage payments the amount to your unsercureds would go down? I've heard of that happening. does anyone know if that is a possibility that her attorney could present that plan? That all of their disposable income still goes into the plan but the distritbution changes????? I've heard of people paying zero to unsercured?

[2bclear]

Hi Cindy: thanks for your reply. OUr plan payment is $475/month and I would have to review the plan to see how much is going to unsecured - I am guessing quite a bit since only had two secured creditors other than the vehicle we surrenderd and our current auto loans (x2) and our two mortgages, both of which we pay outside the plan.

I am a bit concerned because if we supplement our income over 10% we HAVE to tell the Trustee so it seems like a revolving door of poopie - I suppose I should just send the notice to the attorney to see what she says. It seems like it's one thing after another.

:{

[2bclear]

Hi RockingGramma:

We knew it would adjust, but didn't anticpate it going up THAT much. I think you are right and I should see what our attorney suggests - it seems almost impossible to fathom and I am afraid it will go up again in June! I am also going to pull our purchage papers to see what the CAP is on the increase. Thanks for the input.

[woeisme]

If you are paying less than $500 into your CH 13 plan, I don't see how there's much you can do to help if your morgage is going up double that, or $1000. To me it sounds like you need to dump the house, I don't see how you can afford it if your disposable income is less than $500, whether you are in 13 or not. Maybe I'm missing something here, but you might want to ask an attorney about surrendering the house?

[Minnymouth]

You need to sit down and have a serious talk with your attorney about this and what can be done..........
Is this payment in your Chapter 13 plan? and the 2nd mortgage outside the plan? Am I understanding this right?

[2bclear]

I spoke with our attorney today and we are going to meet tomorrow to discuss it. Thanks everyone for your input!

[2bclear]

Hi Woeisme,

We are going to meet with our attorney; not ready just yet to dump the house - we worked so very hard to get it. Will let you know how it all turns out - thanks so much for your input!