Chapter 13 w/ lien strip - What is my payment?

[jrippon]

First off I have to compliment the contributors on this forum - I've learned a great deal from posts here, even if it is stuff I wish I never had to know.

My situation - 1st mortgage 185k, 2nd is at 103k, home value is 169k (CMA). My means test shows roughly 550 disposable income (I make too much for Ch 7).

I listed my home hoping for a short sale but I'm worried about a deficiency judgment. According to my short sale negotiator, the 2nd will require 10-20% payment just to release the lien, and 50%+ to give up their right to pursue (2nd is with Chase, even my attorney said they are tough to work with). Given the current state of housing I am expecting lenders to be more aggressive in deficiency collection, especially when the borrowers have the ability to pay.

I'm preparing to file Ch 13. My plan will require payments of $855 to cover attorney fees, 10% to trustee, and 2 non-exempt vehicles (my district requires vehicles go in the plan) for 54 months - total payback $46k.

My attorney massaged my Schedule J to end up with $855 of DMI. He included my 2nd payment of $968 as a mortgage expense. Will the trustee approve this plan with a 2nd lien strip? Or will my payment go up by $968 after the strip?

If my plan payment were to increase to $1853 when the second is stripped, I'm paying back nearly $100k over 5 years and a bankruptcy doesn't make sense any more. I'm current on all my debts. I don't have much other unsecured debt ($15k credit cards and 10k student loans that would be paid outside bk anyways).

I appreciate any thoughts or experience.

[momofthree]

Unfortunately, you cannot use your 2nd mortgage expense if you're stripping the lien. Since you say your attorney "massaged your schedule J to end up with $855" DMI, can he massage it a bit more so that the whole $968 doesn't go straight to DMI?

Do you have any unsecured debt or is the 2nd lien the whole reason for filing?

Really the additional $968 only totals $58080, but if the 2nd is your only unsecured, then that's over 50%, so you may get a better deal by settling. Or you may just choose to walk away.

[jrippon]

Unfortunately, you cannot use your 2nd mortgage expense if you're stripping the lien. Since you say your attorney "massaged your schedule J to end up with $855" DMI, can he massage it a bit more so that the whole $968 doesn't go straight to DMI?

Do you have any unsecured debt or is the 2nd lien the whole reason for filing?

Really the additional $968 only totals $58080, but if the 2nd is your only unsecured, then that's over 50%, so you may get a better deal by settling. Or you may just choose to walk away.

Yes, the 2nd lien is the whole reason for filing. I have $15k in credit card debt, not a small amount but manageable. He probably could massage it the other way, maybe a hundred or two off the $968. I read in the sticky on Ch 13 lien strips that the second payment should be included on schedule J since it is unknown whether the lien strip will actually happen at the time of filing. If that's how it stayed then I would definitely file. If the trustee will come back and change my expenses after the strip, then settling or walking away are much more appealing. The problem is I can't know for sure without filing. Anyone have a time machine I can borrow? :-)

[jrippon]

My attorney took the 2nd payment out of schedule J and added some more future expenses to come to the same DMI. My wife and I are expecting our second child in May. My wife's insurance has a $7500 maternity deductible so he included that divided over the next nine months, plus food and clothes for the new baby. If the trustee objects I don't know how I'm going to afford another child. Fingers crossed!

[tammygirl1]

When we filed, my atty left the 2nd in sched J but after filing and when he submitted the Motion to avoid lien he amended my sched J to remove the 2nd but added expected taxes since I don't have enough taken out.