Our Chapter 13 bankruptcy was set on a 100% plan ($850) for 36 months paying back approx $30,000 in debt. 9 out of our 10 debtors put in a proof of claim. After our lien strip hearing I found out that the judge ordered our $44,000 second mortgage as unsecured debt and we have to pay it back at 100% now also. This increased our payment to $1375 over 5 years. Essentially paying back all our debt. We are above the median, but by alot. $1375 is in addition to our 1st mortgage and 2 car payments, etc. I feel like we have been duped. We went into Chapter 13 to discharge the 2nd mortgage. Any thoughts... feeling like I am under water again.
-
-
Correction.. above the median, but not by a lot. -
Ok, first off, if you were above median income your Plan should have been set at 60 months, not 36, so I am not surprised that the Court (more likely the Trustee) has directed the Plan be extended.
When you strip off a junior lien that lender becomes an unsecured creditor (unless it is a purchase money loan and your State has an anti-deficiency statute that applies). As an unsecured creditor it has the right to share in the payout to general unsecured creditors. If you can afford to pay 100% of all allowed claims within the 60 months and that includes the strip off debt then you will have to pay 100% of the claims. Also, you must be mindful of what, if any, non exempt assets you have that you want to keep. If you have that million dollar Rembrandt and don't want to part with it then you have to pay all creditors, presumably in full even if you can't afford it on paper.
You need to sit down with your attorney and review your Schedule I and J. Under Lanning you look at your projected disposable income at the time of Plan Confirmation. What can you really afford to pay? Remember, your expenses must be within reason and justified. Don't feel betrayed just yet. Talk to the attorney.Comment
-
Thank you for your response. Also, what happens when we have large expenses. Now I am unable to put away any money for unexpected problems. I know I will need a washer soon and vehicles will need repairs. I just don't see how to afford them now. College is coming in less than 2 years. Can we adjust our plan now for that?Comment
-
Unexpected expenses that are not on-going, such as the vehicle repair or the need for a new washer can be handled by the filing of a Motion for Moratorium which asks the Court for a short break in the plan payments, say 3months, so that you can pay for the unexpected expense. However the missed payments have to be made up so that usually will mean a slight increase in your payment when payments resume.
As to the college expense, that will depend upon your jurisdiction and a modified plan reducing payments is the way to deal with it. My jurisdiction limits the expenses and the limit is not clearly defined. I have an easier time putting "tuition books & board" into Schedule J for a client paying for a state or community college than one paying for a private college. I always encourage my clients to search for scholarships and grants since there are so many available and for so many ingenious reasons. You will have to cross that bridge when you get to it.
DesComment
Comment