Early payoff questions

[despritfreya]

How can one have some unsecureds being paid at 100% yet not all? Trustee's office and lawyers office both state the prop. taxes and dr bills will be paid at 100% - yet the 2nd wont be. I think thats where I'm confused. Does that make sense? I know they're adding it in the mix (as you stated above) because it shows as such.

I don't have the answer but if you are satisfied with the amount you are paying in, regardless of whether or not it really pays 100%, maybe questioning it is the wrong thing to do?????

Des.

[Pandora]

I don't have the answer but if you are satisfied with the amount you are paying in, regardless of whether or not it really pays 100%, maybe questioning it is the wrong thing to do?????

Des.

LOL! Very true. I was just curious as to how it could be 2 different %'s. Trust me...not complaining at all!

Thanks for the time.

[jennerik]

Update...I just checked 13datacenter and it matches Pacer. Both show the 2nd as unsecured, not claimed. Does this mean that if all the other debt is paid, I can discharge early or will this start once the other debt is paid?

[LadyInTheRed]

You are one great attorney! I wish more were like you. (And, the poster is from California which is a non-recourse State. Unfortunately, my state (Florida) isn't.)

California is non-recourse as to purchase money loans only, which jennerik's 2nd is not.

[LadyInTheRed]

if your 2nd filed a secured claim, but did not amend it to unsecured status, it should not be counted in the mix

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

[despritfreya]

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid. OP should check the Trustee's case status system to see how the claim is classified by the Trustee (secured, unsecured, objected to, disallowed etc.)

Des.

[Pandora]

So, if the 2nd is stripped and the mortgage holder doesn't amend, they get nothing when the case is discharged? Is there a deadline to amend a proof of claim?

Lady - remember when you said your paperwork stated "pro rata" and I told you that looked familiar? I just pulled ours..and it says (judges order) as follows:


"......Because the amount of the first lien on said real estate exceeds the value of the
Residence, there is no equity to which the second lien can attach. The Plan has therefore
proposed that the second lien be avoided in its entirety and the entire debt would be made an
unsecured claim and paid pro rata with the other allowed unsecured claims.

4. Upon consideration of the Complaint, it is hereby ORDERED that:

A. The claim of Defendant, XXXXXXXXXXX, regarding the second deed of trust lien is
allowed as an unsecured claim, subject to review and additional objections by the Chapter
13 Trustee.

B. The second deed of trust lien of Defendant, XXXXXXXX, is void and shall be of
no effect during the pendency of this case under chapter 13. The claim of XXXXXXXXX XXXXXXXX regarding the second deed of trust lien shall be allowed in full as an unsecured claim and shall be treated as such under the Debtors’ Chapter 13 Plan. The lien shall be void for all other purposes when and if the Debtors complete their performance as
required by the confirmed chapter 13 plan.

C. The Debtors shall not file this judgment with the Clerk of the Court for the Circuit Court
of the XXXXX XXXXX until the Debtors have completed their performance as required
under the Chapter 13 Plan and has received their order of discharge. Upon receipt of the
order of discharge in this case, the Debtors may file a copy of this judgment with the
Clerk of the Court for the Circuit Court of the XXXXXXXXXXXX. The Debtors shall also,
at that time, file a copy of the order of discharge with the Clerk of the Court for the
Circuit Court of the XXXXXXXXXXXX.

D. The Clerk shall send a copy of this Order to Debtors’ counsel so that he may record the
same in accordance with the Local Rules of this Court.

______________________________
U.

Okay.. so from what I'm reading - its an unsecured even though on PACER its still showing "secured" but also states "Lien Avoided", and its supposed to be paid at the same rate as the other unsecureds..but it wont be. ETA: wanted to note that there are and have been no objections by our trustee.

See where I'm confused...

[enginegirl]

You are one great attorney! I wish more were like you. (And, the poster is from California which is a non-recourse State. Unfortunately, my state (Florida) isn't.)

A little off topic.. But Just broke what do you mean by non recourse vs recourse....
thanks a frustrated engine girl!

[jennerik]

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid. OP should check the Trustee's case status system to see how the claim is classified by the Trustee (secured, unsecured, objected to, disallowed etc.)

Des.

It shows unsecured.

[justbroke]

I am not aware of any deadline to amend a claim. Since it is my understanding that secured creditors get paid as provided for in the Plan, if there is a strip and the creditor does not amend, the claim will not be paid.

In my District, the Order granting the Motion to Determine Secured Status and Strip Lien of Creditor... contains language that the creditor's is allowed an unsecured claim with respect to the bifurcated claim. They don't actually have to file a "new" claim in our District, since a new claim would be seen as a duplicate. The order itself amends the claim. At least in my District.

There have been some arguments, however, that a creditor that has their claim bifurcated into a secured and unsecured component, with the secured component being $0, may be in trouble if they didn't file their claim correctly. I read some cases where secured creditors that didn't anticipate the strip would not be allowed to file a new unsecured claim or amend their existing claim to show a secured and unsecured portion. The creditor would have needed to file the claim initially as both a secured and unsecured claim. I have seen some where the creditor states the full amount of the balance less $1 as the secured portion, and then makes the unsecured portion $1. That way, they can amend the claim... without filing a "new" claim.

So, what you say Des is spot on, but I see very few attorneys, at least in my District, challenging an amended "secured" claim that is all of a sudden an unsecured claim. It is likely because our General Order has a standard lien-strip order that "grants" the unsecured claim.

[justbroke]

A little off topic.. But Just broke what do you mean by non recourse vs recourse....

Non-recourse means that the the lender/creditor cannot sue the debtor for any deficiency created by foreclosure. Most States are recourse States where the lender can sue the debtor for the difference between the loan balance and the amount the property sold for at foreclosure. In almost all States, if the foreclosure is by a "Power of Sale" clause in a non-judicial foreclosure, it is always non-recourse.

States like Arizona and California, already make a "purchase-money" loan non-recourse. "Purchase Money" means that the loan was used to actually acquire/purchase the property. A refinance "destroys" the purchase money status. (There are some arguments that a refinance can't destroy the "purchase money" status of the amount that was actually re-financed. In other words, if you had a purchase-money loan for $200K. Then refinanced for $300K taking a $100K cash-out, the original $200K might still be deemed "purchase money". However, California caselaw, for example, clearly shows that the refinancing destroy the "purchase money" aspect of the entire amount.)

[jennerik]

Since it shows unsecured, will it pop up if I try to pay the 13 off early?

[LadyInTheRed]

Lady - remember when you said your paperwork stated "pro rata" and I told you that looked familiar? I just pulled ours..and it says (judges order) as follows:

No, I don't remember saying anything about "pro rata." I have mentioned that my confirmation order provides the pay off to unsecured creditor is "pro tanto". But, there is nothing in my confirmation order or lien strip order that says "pro rata." It is possible that I might have said that my second will get a pro rata share of whats left to pay unsecured creditors.

Okay.. so from what I'm reading - its an unsecured even though on PACER its still showing "secured" but also states "Lien Avoided", and its supposed to be paid at the same rate as the other unsecureds..

Right.

but it wont be.

I don't understand why you think that. It will be paid at the same rate as other unsecureds. Oh! I get it! It's because of my question to Des regarding whether the 2nd won't get paid if the claim is not amended. I think paragraph 4.A. of your order negates the need for the bank to amend the claim since the court has already ordered that it is approved as an unsecured claim. I wouldn't worry about it being listed as secured on PACER. The language in the order is what is important, not what somebody did or didn't update on the computer. My order doesn't have the same language as yours. But, because so little will go to my unsecured creditors, it probably isn't worth the cost for the bank to file an amended proof of claim.

[Pandora]

Lady..

my mistake... you're correct, you did say "pro tanto" I knew it was pro-something-or-another LOL

As to the 2nd being paid at the same rate as the others ... thats impossible to do as everything else IS getting paid in full at 100% of whats owed - but the 2nd will not be at 100%. Maybe this is easier:

36K base plan / over 60 months.

Laywer fees: 2750
trustee % over course of plan: 2500
taxes owed: $900 (its somewhere in the 800's not quite sure so will put 900)
Dr Bills: $2K
2nd mortgage: roughly $80K

If you add all of the above except the 2nd mortgage, its about $8200 or so owed - and then deduct it from my base plan ...that leaves roughly $27-28K for the 2nd, which is not 100% - yet everything else will be paid back at 100%.

So I have 2 different percentages in my plan yet it states "pro rata" meaning they should all get the same amount - right? How on earth would that work? If they paid pro-rata (after attorney / trustee fees) then out of my 4 actual claims, each would get approx. $7600K when I dont owe that much to them.

OMG I think I'm even more confused myself now typing all of that! Does it make more sense to you now or did I confuse you even more? LOL

[LadyInTheRed]

OMG I think I'm even more confused myself now typing all of that! Does it make more sense to you now or did I confuse you even more? LOL

It makes more sense now. Assuming you are devoting all of your DMI to the plan, the unsecureds will no longer get 100%. If you weren't paying all of your DMI because you didn't need to in order to pay 100%, your payment may need to be increased. That's my understanding of how it would work anyway. An initial plan anticipates a certain percentange to unsecured creditors, but that can change depending on what claims are filed and if the stripped mortgage wasn't taken into account when drafting the plan. I think your plan should have included the fact that the mortgage was being stripped. I don't remember, was your plan already confirmed?