Large Final Payment due in 1 year Ch. 13

[Jinks221]

I filed Chapter 13 in 2006 when my home value was 130,000 more then it appraises at now. In the BK, I agree to refinance the remaining 14,000, which actually is 22,000 because of interest now. I spent the first 2 years rebuilding credit just to find out my house value was dropping and could not refinance. So, at the end of next year my BK will be discharged but I have to pay 24,000 or my house is collateral Do I have any options? Some of the debt is county home taxes so they cannot be turned into a chapter 7.

[newbie2]

I filed Chapter 13 in 2006 when my home value was 130,000 more then it appraises at now. In the BK, I agree to refinance the remaining 14,000, which actually is 22,000 because of interest now. I spent the first 2 years rebuilding credit just to find out my house value was dropping and could not refinance. So, at the end of next year my BK will be discharged but I have to pay 24,000 or my house is collateral Do I have any options? Some of the debt is county home taxes so they cannot be turned into a chapter 7.

You need to talk to your attorney soon to have that order modified and/or stricken. Obviously there isn't any (or much ) equity now for the trustee to distribute. Make an appointment with your attorney so that the correct steps can be taken now, instead of at the end of next year.

[Jinks221]

Can you modify an order? I thought my only option was to file another ch. 13 at the end of this one? Anyone have similar circumstances with a balloon payment at the end of their BK. Yes, you are correct their is no equity for the trustee to distribute.

[despritfreya]

This is the problem with "balloon 13's". You were required to put in a certain dollar amount to pay all creditors that needed to be paid over the 60 month Plan. At the time you formulated your Plan the only way you could afford to fully fund the Plan was to agree to a speculative balloon payment at the end. Now you know why such Plans are a mistake.

You need to discuss with your attorney how you are going to fully fund your case over the next one year thus eliminating the large balloon at the end or you need to figure out how you will secure the required funds in month 60. Baring proper funding your case will either be dismissed or converted.

Des.

[Jinks221]

Des, What do you mean converted? I realize if I pay it off it is dismissed. Can I file a ch 7 or 13 again for the remaining (obviously that's not what i want to do).

[despritfreya]

Des, What do you mean converted? I realize if I pay it off it is dismissed. Can I file a ch 7 or 13 again for the remaining (obviously that's not what i want to do).

You have a long ago confirmed plan. If you cannot complete the terms of the Plan or modify it in some way there are only 2 choices, dismissal for failure to complete the plan or conversion to Chapter 7 (assuming you "qualify").

If the case is dismissed you could file another case but since I do not know what you were trying to accomplish in your 2006 case I cannot comment. It would be more or less like starting over. Maybe you would get credit for what has already been paid but there is no way for me to know. For example, if your current Plan was paying priority taxes, interest on those taxes stopped running on the day you filed. If case #1 is dismissed all of the interest that has been stopped will be added to the priority claim for case #2.

You really need to discuss the idea of filing case #2 with your attny.

Des.

[Flamingo]

"Balloon" Chapter 13's were quite common during the boom years in housing. We started out with a normal plan but after we filed my employer went bankrupt a month later and I had to find another job quickly to stay in our Plan - I did but at $6,000 per year less; therefore, our attorney was able to get our paymeht lowered but we had to make up the difference with refinancing at the end of our plan. We had a ton of equity in our house when we went into the plan and even after refinancing to pay off the plan had a ton of equity. We still have a good bit of equity even after the housing value drop. Balloons worked then for most (did for us and we even bought out early) but are not popular now - yours was filed prior to the big housing bust taking effect and what you should have done was speak with your attorney when housing values started to fall to see if something could be done at that time. You need to sit down now with your attorney and go over your options. Right now you are required to pay that payoff payment or you risk dismissal.

[Jinks221]

What is dismissal of the plan? We started with approx. 60,000 in plan and have 13,000 left this year with approx 24,000 balloon. The remaining includes house taxes and a vehicle along with unsecured debt. If we paid off the taxes is it possible to dismiss and go pay vehicle and unsecured out of the plan? I have talked to lawyer and he said to try to pay it off and if not file 13 again. Just wanting to hear if there are other options.