Just back from 341 Meeting...didn't go so well

[TooMuchCredit]

Well, I got the good ole Good Faith objection due to the expense of my car. ($654 - the allowance is $489).

The trustee had alot of other objections...
I have to submit proof of my charitable contributions (it was on my paystub - United Way) its 1% of my salary. Have to send in proof of my medical expenses. They frowned on my 401K contributions - 5% of my salary. They also objected to my $75 a month entertainment expense on schedule J. They also felt I was too underwater on my house. I was asked why I wanted to keep it. There was a typo in the plan that said I would pay 0% to unsecured (the amount was listed, but the % was 0), but it's really 25%. When told that they said they still objected to the $75 a month expense. Good grief, $75 is not alot! What am I supposed to do, be a hermit for the next 5 years (I am over median so 60 months is a given)?

So I guess I need to now look to see what sort of rental house/apartment I can find that will allow a large pet (have an 80lb dog. Most apartments have a 20lb limit.

I drive out of town 100 miles each way once a week so I have to go find what sort of car I can get now with my trashed credit with nothing to put down.

Not a good day!

[lrprn]

Just because the trustee has issues doesn't mean that you can't fight back by providing proof of your expenses, your charitable contributions, etc. These kinds of trustee issues turn up frequently in 13s - they are a lot more common than you realize. That's why your lawyer is in a good position to rebut them because he/she knows the history of these issues in your local court.

Get your paperwork together that proves what you put on your Means Test and Schedules and provide it to your lawyer to give to your trustee. Unless you did inflate your figures and/or can't prove them, you've got a fighting chance to turn things around. Don't become a passive "oh woe is me" passenger on your own bk and not use your own power in this situation - you have more than you realize.

What does your lawyer say about your trustee's issues?

[TooMuchCredit]

Just because the trustee has issues doesn't mean that you can't fight back by providing proof of your expenses, your charitable contributions, etc. These kinds of trustee issues turn up frequently in 13s - they are a lot more common than you realize. That's why your lawyer is in a good position to rebut them because he/she knows the history of these issues in your local court.

Get your paperwork together that proves what you put on your Means Test and Schedules and provide it to your lawyer to give to your trustee. Unless you did inflate your figures and/or can't prove them, you've got a fighting chance to turn things around. Don't become a passive "oh woe is me" passenger on your own bk and not use your own power in this situation - you have more than you realize.

What does your lawyer say about your trustee's issues?

He said that he can talk to the trustee about some of the items. He implied it will be an uphill battle though as the trustee thinks the house is too far underwater and the car is too expensive. The good faith objection was on the car.

The plan actually was paying $500 instead of the $400 DMI B22C indicated. Yet, my $75/mo entertainment expense on schedule J is excessive. (I thought they had to go by B22C when above median). The trustee originally remarked it was a 0% plan, but that was due to a typo. When my lawyer said the amount was filed in on the petition, the % was just left 0 and it was actually 24% plan, the trustee said he still did not feel 24% to unsecured is enough.

I think I am going to write letters to my home equity loan holders and see if they will treat their loan as unsecured. Sort of voluntary stripping. If I surrender the house, they get $0. If they agree, they will get about 40% and the other unsecureds will go from 24% to 40%. Maybe that is enough to appease the trustee.

Don't know what I will do about the car. I don't have thosands of $ for a down payment on a different one at this point.

[lrprn]

Yet, my $75/mo entertainment expense on schedule J is excessive. (I thought they had to go by B22C when above median).

Whether the local court or court district weights the Means Test or Schedules more heavily varies across the country. Allowable monthly entertainment expenses is most likely driven by the custom in your local court.

I think I am going to write letters to my home equity loan holders and see if they will treat their loan as unsecured. Sort of voluntary stripping. If I surrender the house, they get $0. If they agree, they will get about 40% and the other unsecureds will go from 24% to 40%. Maybe that is enough to appease the trustee.

DO NOT DO ANYTHING WITHOUT CHECKING WITH YOUR LAWYER FIRST! You can really screw up your case going around your lawyer contacting your creditors yourself after you've filed.

Your creditors can't do anything now since you've already filed anyway - they are under the automatic stay and are not allowed to be in contact with you regarding what you owe them. You are stuck with what you had in place when you filed unless your lawyer files an amended plan.

[albacore44]

can they really force you to give up your house if your current on the mortgage, just because the trustee thinks you can't afford it and wants you in something cheaper so you have more disposable to fund a Ch-13 ?? That makes no sense, as you would be defaulting on a secured loan and adding to the debt you would be discharging hurting a creditor that you were planning on paying.

[HHM]

can they really force you to give up your house if your current on the mortgage, just because the trustee thinks you can't afford it and wants you in something cheaper so you have more disposable to fund a Ch-13 ?? That makes no sense, as you would be defaulting on a secured loan and adding to the debt you would be discharging hurting a creditor that you were planning on paying.

They can't literally force you to sell, but they can deny the expense. The net result, if you can't pay your mortage + living expenses + chapter 13 payment, something has to give, your house or dismissal of your chapter 13.

Realize, it is the job of the trustee to object, they will find something in about 95% of cases, so you shouldn't be alarmed that you got an objection, the issue is what can be done about. This is the beginning of negotiations.

Also, the idea of talking to your home equity holders is a non-starter. They can't do anything.

[TooMuchCredit]

Yes, before I send anything I am running it by my attorney. I sent him a bit more detail than I posted here.

It makes no sense to me either to shaft a secured creditor to pay more to an unsecured. But if you are underwater and they don't like the amount you are paying they just insist you pay a higher percentage to unsecured creditors. Since that eats into your food budget, it kind of forces you to give in and give up the secured asset.

In other districts they make it easy to strip those 2nd & 3rd liens. In mine, you have to take it to the judge paying your attorney $125+ an hour. So you have to have a few thousand to fight it. Since you re bankrupt, most people don't have the resources to pursue that.

Apparently, that is just the way it works in my district. It seems to be very credit card company friendly.

It was my mistake taking the advice prior to find this board and my attorney of getting a car that had payments above the IRS allowance. That has me more worried than anything as no reliable transportation, no job. And right now, no credit, no loan.

If anyone else has filed a Ch. 13 in N. Georgia, it would be nice to know if they had a better experience than I.

[TooMuchCredit]

Also, the idea of talking to your home equity holders is a non-starter. They can't do anything.

Does that apply to all districts, though? I had asked my lawyer about trying to get my Home Equity lender to lower their interest rate (12.5%) to that of my 1st (5.625%). He asked the trustee who stated that he is not opposed to pursuing mortgage modification. My lawyer just has to file a motion if they agree to one.

So I think it is permissable to try to work with the mortgage holders. IF not my only option is to surrender the house. I don't have the $ to pursue an adversary proceeding to strip the 2nd. And I don't want diet of Raman and Mac & Cheese for the next 5 years. The lender would have to do it voluntarily. That is reaching but if they feel they'll get enough, maybe they will agree.

[HHM]

Ok, in your prior post you mentioned a voluntary cram down...that is probably a non-starter, getting your interest rate reduced, that is different. Its an option, but frankly, I would hold out too much hope. Second and third mortgages can't really participate in the Federal Modificaiton programs, so there is no incentive for them to help.

[TooMuchCredit]

Ok, in your prior post you mentioned a voluntary cram down...that is probably a non-starter, getting your interest rate reduced, that is different. Its an option, but frankly, I would hold out too much hope. Second and third mortgages can't really participate in the Federal Modificaiton programs, so there is no incentive for them to help.

But if they see the property is worth $X from a recent appraisal and the 1st mortgage is more than X, meaning if surrendered and foreclosed the 2nd would get $0, wouldn't an option for them to get 40% instead of $0 be incentive?

Anyway, no matter how slight the chance, I'll never know unless I ask them.

[Billssuck]

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

[TooMuchCredit]

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

I had an appraisal done in February. It came in low at $122K, on zillow.com at the same time it had estimate of $166K. On the petition I had listed $155K - kind of in the middle. However, I owe $236K total. The IRS rent/housing allowance for my county is $1156 and my combined mortgage payments are $2188. So I am just plain way over what they feel is acceptable.

So it's pretty much give up the house and find something closer to $1156 mon and give the difference to the unsecureds or keep the house and find several $100 more per month out of my other living expenses to pay to the unsecureds.

[Billssuck]

Sounds similiar to me wrt home payments

It sounds like we may be in the same boat. I don't have a current appraisal and I may need to get one it sounds like. For Missouri, the home expense item is $1,174 and my payments on my first and HELOC equal about $2000 a month. There is no way I could trim $800/month to make it work. Maybe it will work more favorable for us since we don't have any other excessive items (i.e. cars payments) to worry about.

We're filing hopefully on May 21st. I'm really not opposed to giving up my house if need be. However, we will be under the means for income and if I have to give up the house then I may pursue a CH7 instead of CH13. I'm looking at maybe loosing the house in a positive light because it is too much money even after a ch13 is finished and it's too big and too much to take care of with a toddler at home (and we're in our late 40's). My husband is having a hard time swallowing it, but I think life would be alot simpler and less stress without the home. Plus if we're so upside down in the house, financially speaking, then it may be better to let it go now instead of weighing us down for many years to come. Just my thoughts.

[arami008]

They also objected to my $75 a month entertainment expense on schedule J.

OMG. I just filed today and for that I put in about $100!

We have to eat out alot because my son goes to the hospital alot due to his condition. We also rent movies and take our kids out, not a lot though.

Yikes will this be a red flag? If needed to can I amend now before my 341 on 5/27?

Thanks

[StartingOver08]

Old appraisals have nothing to do with current market value.

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

The value of your house changes with the market. If you have an appraisal that is older than 90 days - or the sales are older than 90 days - then you do not have an accurate appraisal. It may have been accurate at the time - but in no way, shape or form does it reflect TODAY's marketplace.

The only way to know today's value is to get another appraisal. Or you can get a CMA from an experienced Realtor so you have a more accurate idea of value. But if you are going to be submitting your value to the Trustee to argue a lien strip or keep your house in BK, an appraisal is probably your best option to convince the Trustee of the current market value.

As to tax values - tax valuation is NOT market value. Remember, the property taxes are based on so-called market value AS DETERMINED BY THE TAX ASSESSORS OFFICE. It is not in the best interest of the tax assessors office to show true, current market value as it impacts how much you pay and therefore impacts how much the tax authorities receive in their budget. Naturally, the county/city is not looking to reduce their income -so the tax values are usually kept artificially high.

The Trustee's KNOW that the tax values run high - that is why they use those values. Also its a free public database, so its easy.