chapter 13 & stripping 2nd then converting to 7 in 2 yrs.

[sheilaE]

I haven't asked a question here for at least 3 weeks, so I guess I'm due.

Background: Filing 13 in about 1 month. Keeping the house, stripping the 2nd.

We have only spoken to the atty a few times since our 1st meeting in March because we don't want to have his extra fee's adding up to early.

So, two years into our 13 my husband will be retiring. He is a police officer on a motor bike. His body has just about had it. Lots of medical issues from years of wearing the heavy vest and such. He's pushing it as long as he can, but needs to keep working the next 2 years in order to get his full retirement benefits. Once he retires our income will drop about $1000.00 per month, so when that happens I'm sure we'd need to convert to a 7, but what happens to the stripped 2nd? Are we going to be able to convert or will we need to finish the remainder 3 years, but with the loss in income that would be very hard.
I know I probably shouldn't be worrying about this now, but just trying to be prepared.

[NoTomatoCan]

I haven't asked a question here for at least 3 weeks, so I guess I'm due.

Background: Filing 13 in about 1 month. Keeping the house, stripping the 2nd.

We have only spoken to the atty a few times since our 1st meeting in March because we don't want to have his extra fee's adding up to early.

So, two years into our 13 my husband will be retiring. He is a police officer on a motor bike. His body has just about had it. Lots of medical issues from years of wearing the heavy vest and such. He's pushing it as long as he can, but needs to keep working the next 2 years in order to get his full retirement benefits. Once he retires our income will drop about $1000.00 per month, so when that happens I'm sure we'd need to convert to a 7, but what happens to the stripped 2nd? Are we going to be able to convert or will we need to finish the remainder 3 years, but with the loss in income that would be very hard.
I know I probably shouldn't be worrying about this now, but just trying to be prepared.

You can convert, but the 2nd will not be stripped. The lien is only stipped upon discharge of your CH13.

[sheilaE]

So it'll better to just finish out the 13 then. I guess we could always amend our plan? I'm sure his retirement will be about $1000.00 less per month.

[ColoradoBell]

I think you might consider a modification of your plan once your H retires as you will have less DMI. It will depend on the liquidation value of your assets as to how much you MUST pay unsecureds...if you can still meet that amount with a reduced payment plan, then I think you would be able to continue your 13.

[sheilaE]

Thank you for your responses. The thing that confuses me is from everything I've read on here, they are going to take all our DMI to fund the plan. The only DMI we have is about $600.00 and $500.00 of that is our 2nd that we are stripping. Once my H starts receiving $1000.00 less per month in 2 years, we won't be able to continue to make that payment.
Sigh.....

[Pandora]

are you sure you're budgeting everything you can before you go into that monthly payment? What are your states allowances for items/goods/etc?

I think before I signed the paperwork for a Ch. 13 and you know that you cannot sustain it for the full 36-60 month timeframe, I'd seriously review your budget and see if you can get your DMI down as much as the trustee will allow. Does your lawyer know how things will be when your husband hits that 2 year mark? You dont want to have to go into a 13 only to turn around and convert it to a 7 - and have all the interest and penalties from your 2nd tacked on, and then possibly face foreclosure in the process, should they decide to exercise that right.

[sheilaE]

Confused on the "get it down part". You mean to lower our DMI? I'd love to have it lower, but don't we have to pay back a certain amount? I have no idea what it is
The atty doesn't know about my husband retiring in 2 years. We were so stressed when we went to see him-our heads were spinning because we went in thinking we were doing a 7 then found out we didn't quality. We'll definitely talk about it when we go in to file.

[vicmost]

I don't know the particulars of your case but it has been 19 months since I stopped paying my unsecured creditors and second mortgage. I will be filing 13 with a lien strip as well. Nothing has happened to me except a few phone calls and letters of which I refer to my lawyer. Bk is not the end of the world and there are many good people going through the same thing that you are. It's a bit overwhelming at first but your heading in the right direction.
Why not wait till your husband retires? Meanwhile you can prepare for bankruptcy and explore your options...
You should really tell your lawyer EVERYTHING! He can't prepare the best possible plan without all of your information and or intentions.....If you don't like his plan talk to 3 more lawyers and get there opinions...All my consultations were free...
Etc.
Keep your head up and take charge of what you can control..

[needanswers]

From what I understand, you would lose the ability to strip your second if you convert to a 7. The 2nd mortgage company would be expect all the back payments, too.

Once your hubby's income is reduced, it would be best for you to modify your plan at that time.

[SMinGA]

There is not always a minimum amount to be paid into your plan. If there is, it would be based on:

atty fees paid in plan, must be paid in full
secured debts paid in plan, must be paid in full
IRS debts paid in plan, must be paid in full
mortgage arrears, must be paid in full

Also if you have non-exempt assets that you want to keep, you must pay at least that much into your plan.

And of course part of what you pay goes to the trustee.

In time when your income changes - you should be able to modify your plan. But you may need to take steps to cut expenses to make room for some sort of plan payment in order to get the lien strip completed. Or perhaps at that time, you could find some part time employment for some additional income to balance things out.

[SMinGA]

Then again - if w/ the 2nd you only have $100 DMI... You may want to consider finding an attorney who will push for a ch. 7 for you now. Mark retain & pay (so that the 1st & 2nd mortgage payments count in your expenses & means test) and plan to ultimately give the house up. After discharge, start saving $ and prepare to move when you must.

With retirement and a reduced income right around the corner, letting the house go might be the right decision?

[Pandora]

There is not always a minimum amount to be paid into your plan. ......

Also if you have non-exempt assets that you want to keep, you must pay at least that much into your plan.

SMinGA is correct - this is what our plan consists of - along with trustee and attorney fees - with our only secured item being our real estate taxes.

Yes - I meant to lower your DMI by seeing if you're claiming everything you are allowed to.

As SMinGA stated - what is it exactly that you are paying into your plan other than trustee and attorney fees? any mortgage arrears - non-exempt assets you want to keep? If there is a minimum by those standards, then it may be impossible to lower your DMI.

[needanswers]

I think if I were in this situation, I would do the 13 and amend the plan after the income drops. That way you can strip the 2nd.

[sheilaE]

Thank you everyone for your wonderful responses. I feel so alone in this (husband is onboard, but works long hours) and it's not like I can call my friends or family and ask questions. No one knows anything about what we are going through, so I come here and ask questions or vent-everyone is extremely supportive and understanding. Each time I log off I take a deep breath and say to myself...we're going get through this just fine.

Ok, so after reading all the posts, I think what we will end up doing is move forward with the 13. Not able to wait until his retirement, this stress of waiting is already too much for me. In 2 years when he retires I will take on a P/T job and we'll finish out the remaining 3 years. Then we will be completely debt free (except for our mortgage) and that 2nd will be gone.
Who knows...when we go in to file, our atty may recommend we go a different route. Meanwhile, I'll be here on this site.....reading, learning & taking notes.
Sheila

[Pandora]

Just be sure when you are looking "down the road" at year 2 at that part time job, that is going to be a very stable long term part time job as you'll still have 3 years to go on your CH. 13 plan and you'll need to clear at least what your husbands income difference is/was.

I still would discuss it with your attorney - you dont want to go into a 13 knowing that 2 years in you wont be able to fund it. Jobs are hard to get today (part time or full time for anything concrete and consistent), who knows what they'll be in 2 years from now....

I tend to agree with SMinGA on this one, with your husband looking at retirement and you not working currently - perhaps you need to rethink this and see if you cant push for a Ch. 7 now and just do a "pay and stay" type of thing and deal with the 2nd mortgage down the road. Or, maybe hubby puts off retiring until your 13 plan is complete. ?

Something to think about...