Continuing minimum payments to creditors in Chpt 13

[diggy]

I am converting my Chpt 7 to a Chpt 13 this week.

I am current on all my unsecured credit lines and am wondering if I should continue to make the minimum payments for September and so on until the Chpt 13 case is done?

Or do I need to not do anything until the conversion has been confirmed, the 341 meeting taken place and a repayment plan agreed upon?

The concern is that if I try to pay anyone, they will have to send the money back, can't accept it or it would just be a waste on my end if there is going to be some sort of repayment plan done through the trustee anyway.

My attorney suggested paying the minimums to show good faith. I'm faine with this as I have the money for it (I filed BK not bec of CC debt but because I can no longer afford my home and it's under water) but am wondering if this is the best thing to do.

[justbroke]

I am converting my Chpt 7 to a Chpt 13 this week.

I am current on all my unsecured credit lines and am wondering if I should continue to make the minimum payments for September and so on until the Chpt 13 case is done?

Huh? If you already filed your case (Chapter 7), you shouldn't even be paying them!!!

The concern is that if I try to pay anyone, they will have to send the money back, can't accept it or it would just be a waste on my end if there is going to be some sort of repayment plan done through the trustee anyway.

If you have filed for Bankruptcy, unless this is a secured creditor, you should not be paying them. They are Included in Bankruptcy (IIB).

My attorney suggested paying the minimums to show good faith. I'm faine with this as I have the money for it (I filed BK not bec of CC debt but because I can no longer afford my home and it's under water) but am wondering if this is the best thing to do.

It's good faith when you haven't yet filed. If you already filed... you are throwing money away! (Except where this is a secured creditor and you intend to keep the collateral.)

As for being underwater on your home, I don't understand why you're converting to Chapter 13. Are you doing so to save the home? If you are, how far are you underwater with the home? Is there a 2nd mortgage involved? Are you hoping to lien strip the second, thereby bringing the home's encumbrances back in line with it's true market value?

[diggy]

As for being underwater on your home, I don't understand why you're converting to Chapter 13. Are you doing so to save the home? If you are, how far are you underwater with the home? Is there a 2nd mortgage involved? Are you hoping to lien strip the second, thereby bringing the home's encumbrances back in line with it's true market value?

I had to convert to a Chpt 13 as I am seen as a high income earner.

I do not want to save my home but will be surrendering it. Am only keeping the car. Filing BK to protect self from any deficiency judgements from the 2nd mortgage lender.

The house is under water by a good 50-60%. In keeping this home in CA, AND having to pay additional rent in NYC where I had to relocate due to my job PLUS my cc bills, I've been operating in the negative every month for the past two years.

My question was simple really: If I know the trustee is likely going to make me pay back a good portion of my CC debt, shouldn't I just continue to pay the minimum until the repayment plan is worked out? If the answer is to not pay it at all because there is no point to as it will be completely wiped out, then I understand that, but in my case I don't see that happening.

[justbroke]

My question was simple really: If I know the trustee is likely going to make me pay back a good portion of my CC debt, shouldn't I just continue to pay the minimum until the repayment plan is worked out? If the answer is to not pay it at all because there is no point to as it will be completely wiped out, then I understand that, but in my case I don't see that happening.

I understand the parameters of your Chapter 13 now.

No, you do not continue paying. Do you know that minimum payments are usually 95% interest and 5% or less in principal? Do you know that paying the minimum payment on most credit cards, would have you still paying 20 or even 30 years from now?

If you have filed. You stop paying (period).

The reason I had to ask about the Chapter 7 to Chapter 13 conversion was because there was not enough information in your post to determine what was really going on. Now that I see that you have already filed, you should absolutely not be making payments on unsecured debt outside the Plan.

Did you know that your Plan payment in a Chapter 13 begins 30 days after your conversion to Chapter 13 (or the filing of your Chapter 13)?

Your attorney should have explained this all to you. Your Chapter 13 Plan payments start real quick (30 days from conversion). There is absolutely no need to even think about paying unsecured creditors outside of plan. If you did this, it would actually cause problems as the balance of how the unsecured creditors are paid is via a pro rata share of the disposable monthly income. However, Trustees usually pay all the secured, administrative, and priority claims first before even thinking about paying the unsecured creditors.

Your payments would mess that up and surely receive an admonishment from the Trustee.

[diggy]

thanks for the clarification. I wonder if perhaps I misunderstood or mis-heard my attorney. Either way, I'll clarify everything with her tomorrow. But what you are saying is how I understood it: to NOT pay any unsecured creditor.

[justbroke]

But what you are saying is how I understood it: to NOT pay any unsecured creditor.

Correct.

[unclerico]

I stopped paying CC Bills, auto loan, mortgage, and other loans the day I filed. My mortgage and crammed down car is part of the plan payment. The advice given is correct, stop paying the CC's, call them and give them the case number and attorney info once you file.