Delay filing to get caught up on mortgage

[greenthinker]

Hi All,

My wife and I have retained an attorney to file for Ch 13 to deal with excessive unsecured debt and being three payments behind on my mortgage. Our attorney has said that the regular mortgage payment, as well as the amount in the arrears has to be included in the payment plan. The trustee's fee for the mortgage payment plus the arrears will be an extra $200 per month for 5 years ($12,000). I'm having a hard time swallowing that!

Soooo, I came up with an idea... I am now making enough money with overtime, that I could get all the way caught up on the mortgage in four months, provided that we delay filing until then and continue to ignore our unsecured creditors in the meantime. Does this idea make sense? Or, could this backfire?

I should mention that one of our unsecured creditors is the IRS, which probably complicates things.

Any thoughts would be appreciated!

[jcj112562]

If I recall correctly, the mortgage *arrears* must be included in the Plan for payment, but as long as you can make your regular mortgage payment (from you to the bank, not through the trustee), then you should be able to write the Plan that way. I filed a Ch13 Plan pro se and have paid my mortgage myself, without the trustee taking the required fee for paying it. That is what the "standard" Ch13 Plan in the Northern District of GA looks like, at any rate.

John

Oh, and the IRS isn't exactly an "unsecured" creditor...they get dibs, just like the trustee and attorney...or at least that is what I remember.

[greenthinker]

That is what I was hoping for, but I asked our attorney and he confirmed that the mortgage payment has to be included in the plan along with the arrears. I think it depends on the district.

The IRS debt is unsecured, but it is a priority debt, so yes they get dibs, like you said.

[walkthaplank]

Your DMI will be your DMI. Whether it is going to pay your mortgage arrears or your unsecured debt makes no difference to you, and it won't change the amount that the trustee is paid for their "service".

Also think about this, if you show that much overtime for a few months just prior to filing, the trustee may argue that this is your typical income. Yes your lawyer can fight it, but it is just another headache. If it were me, I would file putting the arrears into my plan, wait until after the 341 and then focus on sucking up overtime and socking it away for an emergency.

[BNKRPTinNC]

Being kind of a numbers guy I'll throw my 2 cents in. The only time I would take issue with the amount of money the trustee gets would be if I were in a 100% payback. Anything less, then the point IMHO, is moot as you are not having to pay back all penalties, interest, etc. In my case the trustee gets 7% on a base of a little over 100k with 14% going to unsecured. I would rather pay the trusteee the 7% than paying 100% to unsecured, if you can follow my thinking.

As for the arrears and mortgage we had ours put into plan, as required in this district. We had not paid mortgage for 6 months and was in the beginning stages of foreclosure when we filed. By putting the arrears into the plan there were no extra charges and interest is nil over the 60 months of paying that back. Worked for us.

My guess, since it was "your" idea, would be that your atty might have an "idea" of his/her own and would have the best answer for your situation. Good luck.

[greenthinker]

That is exactly our situation; we are going to be in 100% payback because our DMI is plenty high enough. (Sorry…I should have pointed that out earlier.) So, if I have to pay the 7% trustee’s fee on our mortgage payment, then I will feel like I’m tossing about $200 per month out the window.

Let me ask a different question, now that I think about it. Let’s assume that we go ahead and file a plan that includes the mortgage payment/arrears and 100% to unsecured creditors. Then, let’s assume that over the next few months we can build up enough in our savings to pay off the arrearage on the mortgage. (Again, we are paying 100%, so we would not be forced to pay extra money into the plan.) Is it possible, either pre-confirmation or post-confirmation to modify the plan to take the mortgage out altogether?