Help!! Confirmation Tomorrow!

[MelCapp]

We are about to be confirmed with a plan I'm not sure we can actually live with, but we've agreed to it because our attorney won't fight for us and we've been at this for a year.

My question of the moment is: the Trustee indicated that their fee is 6.5%, so that's what I used to calculate the disposable income on the b22c.

When I got a hold of their calculation spreadsheet, though it says 6.5%, when you do the math it's actually 6.95%, and the excess is being tacked on top our monthly payment (so it's now above our DI from the b22c). If they had said it was going to be 6.95%, I would have used that to calculate the DI.

It's not a huge amount, but my objection is to this deceptive practice. Anyone ever seen this before? It may be an accounting practice like banks use to adjust rates for inflation, but is it legitimate and legal?

On the b22c, what if I had estimated the 8% that is the standard for our area (from the doj web site), but they later adjusted their fee down to 6.95% (I think they did this because we have a $2500 mortgage that we're paying through the plan, the fees on which is all "gravy" for them)? Would I have been able to have the benefit of the 8% as calculated taken as a deduction to determine our DI and I wouldn't be quibbling about this addition to our monthly payment?

If we agree to this just to get confirmed (which I will find very hard to swallow, when that amount could literally be used to buy groceries to feed my kids vs. going into the Trustee's pocket), can we get a real lawyer (ours is awful) and contest it later?

[SMinGA]

Are you sure you're figuring it correctly?

The trustee gets 6.5% of what you pay in, not 6.5% of what the creditors get. I believe you may have miscalculated? Such as $1000/mo payment has $65 trustee fee and $935 to distribute. By the math, the trustee payment works out to be 6.95% of what is distributed, but it is 6.5% of what you pay in.

The trustee fee should never change your payment. Your payment gets set, and the trustee gets a % of it.

[MelCapp]

I am taking the total of:

Attorney Fees
Unsecureds
Mortgage
Mortgage Arrears

and multiplying it by 6.5%


And as to this statement:

"The trustee fee should never change your payment. Your payment gets set, and the trustee gets a % of it. ", this is not what he is doing, and I have been fighting it every step of the way. Should I say I want to talk to the judge about it?

[SMinGA]

That is not how it works. You are miscalculating.

The TT fee is not 6.5% of the total that goes to "Attorney Fees/Unsecureds/Mortgage/Mortgage Arrears". Instead the TT fee is 6.5% of your total monthly payment. The rest gets distributed.

Your payment is $X. That should be income less expenses, also known as your DMI. The debate leading up to confirmation is generally about what expenses you actually get to claim...

Trustee gets 6.5% of $X, and so that leaves 93.5% of $X to distribute. It pays your mortgage, arrears, and atty fees. Mortgage will be every month of the plan, of course. Once arrears & atty fees are done, the rest goes to the unsecured.

[MelCapp]

Here is what he is doing:

He picks a number for the unsecureds: 42600
He adds attorney fees of 2800
He adds Mtge Arrears of 19034
He adds Mortgage of 153987
He gets that total and multiplies it by 6.95%
Gets the total and divides it by 60 months

If the amount is higher than our DMI, he doesn't care.

I don't know how to get them to understand and I've said it many different ways. My attorney doesn't understand what I'm saying, and she ends up editing my comments and saying the wrong thing to the Trustee.

I went back and recalculated the DMI based on the 6.95% fee (which reduces the DMI).

The Trustee has always started with some amount he wants to give to the unsecureds and goes from there, never the other way around. I don't know how to make it simple enough for them to understand.

Here's what I've said:

“If the administrative fees are greater than 6.5%, the disposable income number will change, as will the amount available to the unsecureds. But the monthly plan payment amount remains the same.”

But he keeps putting the additional fee on top.

I may just give up but it will bug me for 60 months.

[SMinGA]

That may be how its listed, but its figured like this:

Your payment is calculated to be about $3893.35 mo. X 60 that means you'll pay about $233,600 total.

6.5% TT Fee: $15,180 (6.5% of the total you pay in)
Atty Fees $2800
Arrears: $19,034
Mortgage (60 payments) $153,987

Subtract all of that from the $233,600: $42,600 remains for unsecured.

Unsecured gets what is left after all else is paid.

[SMinGA]

The TT fee is more like a commission than a sales tax.

Commission:
You sell your home for $100,000, and pay your realtor 6.5%. Realtor gets $6,500 and you keep the other $93,500. Commission does not change the total dollar amount of the transaction, just splits it among different parties. If your realtor renogiates and asks for 7%, the home still sales for $100k unless other factors change the sales price. $6500 is 6.95% of $93,500 by the way. This is where you're getting the 6.95%, comparing what the TT gets to the rest of what you're paying.

Sales tax:
You buy a car for $10,000, with a 6.5% sales tax. Total amount you pay is $10,650. Sales tax increases what you pay.

You're using the Sales Tax approach, it should be the Commission approach. No matter what, you're going to pay ~$3893/mo*. If the TT % changed to 8%, TT would get more & unsecured would get less. You would still pay ~$3893.

*(Your payment would change from changes made regarding expenses. If so that would change the payment, the TT amount, and the amount to unsecured.)

[MelCapp]

The TT fee is more like a commission than a sales tax.

Commission:
You sell your home for $100,000, and pay your realtor 6.5%. Realtor gets $6,500 and you keep the other $93,500. Commission does not change the total dollar amount of the transaction, just splits it among different parties. If your realtor renogiates and asks for 7%, the home still sales for $100k unless other factors change the sales price. $6500 is 6.95% of $93,500 by the way. This is where you're getting the 6.95%, comparing what the TT gets to the rest of what you're paying.

Sales tax:
You buy a car for $10,000, with a 6.5% sales tax. Total amount you pay is $10,650. Sales tax increases what you pay.

You're using the Sales Tax approach, it should be the Commission approach. No matter what, you're going to pay ~$3893/mo*. If the TT % changed to 8%, TT would get more & unsecured would get less. You would still pay ~$3893.

*(Your payment would change from changes made regarding expenses. If so that would change the payment, the TT amount, and the amount to unsecured.)

I do understand all of that, but HE is using the Sales Tax approach. That is my complaint.

So if I calculate my DMI using 6.5% for administrative expenses, he should have a number, right? And my plan payment should be based on that number, right? It's not.

[SMinGA]

You don't calculate your DMI using TT fee as an expense. The TT fee does not change your DMI. Even if there were no such thing as a TT fee, your DMI would be the same. (Not that such a plan could happen I think - but if it did, your unsecured would get more $ and your actual payment/DMI would not change.)

DMI is income less expenses. TT fee is a % of your DMI/plan payment.

DMI = plan payment (generally, schedule I less schedule J. TT Fee is NOT an expense on schedule J)
plan payment, less TT fee, goes to your creditors. So a 6.5% TT fee means 93.5% of your payment goes to debt/atty fees.

Am I right, by the way, that your plan payment is approx $3893/mo so paying total of about $233,600? And 6.5% of the $233,600 = $15,180, which is what the TT is due to get?

I do understand all of that, but HE is using the Sales Tax approach. That is my complaint.

So if I calculate my DMI using 6.5% for administrative expenses, he should have a number, right? And my plan payment should be based on that number, right? It's not.

[MelCapp]

Yes, SMinGA, you are spot on to what his calcs are. I still don't get it*. But we are moving forward anyway.

* I actually have no idea how my "plan payment" was arrived at. It is not I - J, and it is not DI from the b22C. It feels like made up numbers. And my attorney can't explain it, she just says the trustee can say whatever he wants.

[espo1357]

We are about to be confirmed with a plan I'm not sure we can actually live with, but we've agreed to it because our attorney won't fight for us and we've been at this for a year.

My question of the moment is: the Trustee indicated that their fee is 6.5%, so that's what I used to calculate the disposable income on the b22c.

When I got a hold of their calculation spreadsheet, though it says 6.5%, when you do the math it's actually 6.95%, and the excess is being tacked on top our monthly payment (so it's now above our DI from the b22c). If they had said it was going to be 6.95%, I would have used that to calculate the DI.

It's not a huge amount, but my objection is to this deceptive practice. Anyone ever seen this before? It may be an accounting practice like banks use to adjust rates for inflation, but is it legitimate and legal?

On the b22c, what if I had estimated the 8% that is the standard for our area (from the doj web site), but they later adjusted their fee down to 6.95% (I think they did this because we have a $2500 mortgage that we're paying through the plan, the fees on which is all "gravy" for them)? Would I have been able to have the benefit of the 8% as calculated taken as a deduction to determine our DI and I wouldn't be quibbling about this addition to our monthly payment?

If we agree to this just to get confirmed (which I will find very hard to swallow, when that amount could literally be used to buy groceries to feed my kids vs. going into the Trustee's pocket), can we get a real lawyer (ours is awful) and contest it later?

Not much I can offer you here, as I am a novice.

but, you cannot go on this plan if you are going to struggle because if you miss payments, your case is going to get dismissed, and you would lose what you put into the plan, this I am pretty sure of.

So, you don't qualify for a 7?

I would just find another lawyer if this bum is not working for you.

[SMinGA]

Believe it or not, some people intentionally go into a 13 - as its the only chapter that will accomplish what is needed. Such as with mortgage arrears.

Not much I can offer you here, as I am a novice.

but, you cannot go on this plan if you are going to struggle because if you miss payments, your case is going to get dismissed, and you would lose what you put into the plan, this I am pretty sure of.

So, you don't qualify for a 7?

I would just find another lawyer if this bum is not working for you.