Lien Strip - Length of Plan

[UpsideDownMI]

When doing a lien strip is 5 years the required plan length even if you are under the median income? One of the reasons that I have been leaning more towards a 7 was the fact that a lawyer told me that if I stripped my 2nd mortgage my plan would go from 3 years to 5 years.

I have searched the bankruptcy code and can not find anything to support his statement. The only thing that I could find that would require a 5 year plan regardless of income was "priority claims in full unless a particular priority creditor agrees to different treatment of the claim or, in the case of a domestic support obligation, unless the debtor contributes all "disposable income" - discussed below - to a five-year plan". Does the 2nd lender become priority after a lien strip? If so, that would explain his statement.

[HHM]

I haven't heard that either...the rule is simply that if you are under the median, you do 36 months.

And no, the 2nd mortgage does not become priority, they are become a general unsecured creditor.

[justbroke]

I will add my $0.02. There is nothing in the Bankruptcy code which even hints that your plan length must change if you lien strip.

What dictates the duration of your plan is a section of the Bankruptcy Code (11 USC 1325) which indicates the applicable commitment period. The applicable commitment period is either 36 months or 60 months. If you're over the median, it's 60 months (period). If you are under the median, it is 36 months.

The applicable commitment period may be shorter if you are in a 100% plan and can pay in a shorter time (this usually never happens). You may also increase a 36 month (under the median) plan in order to make the Plan affordable and pay arrearages over a longer period.

[UpsideDownMI]

That's what I thought. I think I need to talk to another chapter 13 lawyer to cover my bases. As strange as it may seem, in my area there are several lawyers who will only do a 7. They say it is because in my district chapter 13 has a 70% failure. If I could do a lien strip in a 3-year plan, I think my chances for success would be increased. At least if I decided to file a 7 and got forced into a 13, I have something to look forward to.

[HHM]

That's what I thought. I think I need to talk to another chapter 13 lawyer to cover my bases. As strange as it may seem, in my area there are several lawyers who will only do a 7. They say it is because in my district chapter 13 has a 70% failure. If I could do a lien strip in a 3-year plan, I think my chances for success would be increased. At least if I decided to file a 7 and got forced into a 13, I have something to look forward to.

That is true in many districts...attorneys only doing chapter 7's. It really has nothing to do with the failure rate, its that these attorneys are lazy and not good business people.

[IBroke]

When doing a lien strip is 5 years the required plan length even if you are under the median income? One of the reasons that I have been leaning more towards a 7 was the fact that a lawyer told me that if I stripped my 2nd mortgage my plan would go from 3 years to 5 years.

I doubt that as well. I had my initial appointment today and pointed out that I wanted to strip away the 2nd over a 36 months plan. No objections from his side..