Trustee fee question, house payment

[bkstuff]

Hopefully one of the moderators - or anyone else that has information on this can share.

We have not yet filed. Information that I was confused about is this: When we met with a lawyer, we had just received our 3 month "Trial Modification" with BoA for the HAMP program the day before (if the numbers are right on the trial, we will only be saving about $70/month but they have started an escrow account for us, that we did not previously have because BoA paid late property taxes for us). We are 3 months behind on our mortgages. The lawyer recommended we go ahead and try to get the modification first because the late mortgage payments are rolled to the back of the loan....and therefore would not need to be included in the CH13 payment, and we would not need to pay our house payment with the Ch13, reducing fees payed to the trustee - am I understanding this correctly?

So, if the HAMP is denied for any reason and we need to add our late mortgage payments into the 13, I believe he said the trustee requires the house payment be paid by the 13. SO, if the trustee gets 6-10% that adds a lot to our monthly CH13 payment. What if we do not have that kind of disposable income? My husband thought that the CH 13 payment would not really change (except that we would be paying the house payment through the plan), but that the only change would be that the Trustee would just end of with more $$$ than say our CC company would get????? Can someone clarify this trustee percentage to me?

Hope this makes sense! If not I will try to clarify my question.
Thank you!!!

[SMinGA]

Yes - that is my understanding as well.

Your plan payment should be the difference between what your bring home & what you pay out. The problem that would come in is if w/ the HAMP modification you did not have enough remaining to pay.

Example:

Lets say the HAMP mortgage is $1000 and you pay it directly, with $300 remaining for a plan payment. Assume no priority debts or attorneys fees - that all goes to unsecured less 6% for the trustee.

If HAMP does not work out - and the trustee says you must pay your regular monthly mortgage thru the plan - you would pay $1,300 into the plan monthly. $1,070 needs to go to the mortgage, since you said a $70 difference. Now instead of getting 6% of $300, the trustee gets 6% of $1,300 leaving $1,222 for debts. Most of that goes to mortgage, a little for unsecured. Just less now goes to unsecured than before.

One potential problem - the mortgage arrears needs to be paid off totally in the plan and is security debt. You need to be able to pay enough into the plan to cover that. For us, that meant doing a 5 year plan even though we are below the median. We don't have enough disposable income to get it all done in 3.

Our trustee requires our vehicle loan (3 yrs left on the original contract) to be paid off in the plan, and we have some atty fees and mortgage arrears to pay. The mortgage arrears does not get interest, but the car loan does @ 5.5%. (We were 10.75%) We are doing $479 x 60. We would have needed a payment of about $680 to be able to do it in 3 years.

[bkstuff]

Ok - that is very helpful. Thank you.

We will be stripping our second mortgage with this as well (approx 80K). That was another thing I was confused about. I have read online here that the amount stripped goes as "unsecured debt", but the attorney we met with says if it is "stripped" we do not pay it. That seems different than what I have learned on this site. Maybe he meant, that if we did not have that much disposable income that we would not be paying it???

[SMinGA]

Maybe something was taken out of context?

Unsecured debts get no priority in a 13. Meaning they get paid something only after secured/priority debts get paid. Many 13's pay little or none to unsecured creditors. At the end of the plan, unsecured is fully discharged.

[momofthree]

It really depends on your DMI. If you have excess dmi and will be paying a percentage of your unsecured creditors back, then yes, your plan payment would be the same regardless of whether the trustee gets the money or the unsecured debts do.

However, if you're in a situation like us, where we are paying 0% to unsecured lenders, then the trustee fee going up would increase our payment.

Our car is being paid off thru the bk at $511 a month + trustee fees + attorney fees. That's all we're paying, so if we were to add in our mortgage, the increase in trustee fees would increase our payment dramatically. We were literally having to cut back groceries and transportation expenses just to find the availability to fund our 13 though because we only had enough dmi to cover the car payment...

We are in a unique situation though, most people in a 13 don't have a budget as tight as ours, but we really wanted our 2nd stripped, so what can you do???

[forgotten]

We are in a unique situation though, most people in a 13 don't have a budget as tight as ours, but we really wanted our 2nd stripped, so what can you do???

That's really a good deal though. Basically, the 5-10% trustee fee is all you are paying extra compared to a 7 and getting your 2nd stripped in the process.

[momofthree]

That's really a good deal though. Basically, the 5-10% trustee fee is all you are paying extra compared to a 7 and getting your 2nd stripped in the process.

yes, we're very thankful that we have this option available to us. It amounts to an extra $96 a month. We do have to commit to a 5-year-plan though even though we qualify for a 3-year, but again, it's well worth it.