Trustee's Objection to Confirmation

[AKB]

I recieved a letter from trustee objecting my confirmation. Here is what it says: 1 The proposed plan filed by the debtors is no longer feasible because the claims that have been filed are in excess of the amounts proposed to be paid in the plan. the present amount is inadequate to pay claims filed. 2 The plan does not comply with 11 USC 1325 the debtors are proposing to retain intrest in a luxury item that is not necessary for effective reorganization. Namely one polaris ranger. Any one got any ideas about the first one? I get that he does not want us to keep the 4wheeler but i dont know what the deal is with the first objection. What do we do about fourwheeler will he send someone to repo it? Thanks for any info.

[justbroke]

First, as to your second question, the Trustee doesn't repossess items. You will "surrender" it by marking it as such on your Statement of Intentions and your Plan. (Your attorney will amend the Plan and the necessary schedules/forms.) Then, the creditor will repossess it or not. It's up to them to decide to repossess it. However, you will no longer be making payments on it.

As to your first question, there is not enough information given. Your plan could be infeasible for any number of reasons including, keeping "luxury" items. Because you were trying to keep the four wheeler, your plan "base" had to be at least as much as the four wheeler was worth. Additionally, you may have other "chapter 7 liquidation" issues. (A "chapter 7" liquidation test is based on what you would have paid in order to keep non-exempt property in a Chapter 7.)

Really not enough detail to tell you exactly what the problem with the infeasible plan. You do need to make it work! Surrendering the four wheeler may fix all the issues!

[AKB]

Thanks for info on the 4 wheeler. I am new to all this and don't have a clue how it all works. Our plan base is 72900.00 our payment is 1215.00 and we have 46312.99 secured debt without 4 wheeler and with it added on it is 58709.05. Then we have about 73000.00 unsecured 43000.00 of that is due to letting a transfer truck go back which is only reason we are filing in first place. They repoded and sold truck 2 yrs ago. The company with 4 wheeler has not filed claim and also 10000.00 worth of the cc have not filed a claim.

[AKB]

Update from lawyer: the trustee wants to raise payment to 1500 without 4 wheeler to cover equity in house and 1700 if we keep 4 wheeler. Not sure yet what we will do. We use the Polaris on farm and since we cannot buy another one for 5 years we may we may just have to cut back in other areas to make it work.

[catleg]

The essence of a chapter 13 plan is a negotiation between your lawyer and the trustee to get a good deal for creditors that you will also be able to carry out over 5 years. If the trustee's too tough they get nothing, too lenient and the UST could get on his case. Obviously the ch7 liquidation item here is the equity in the house, and what value is placed on it. If you can argue that down, maybe you can lower the payment. The UST guidelines do not disallow "toys" and in particular if this item is used to work a farm maybe you need to point that out. Both of these objections seem squishy. Work out a number you can live with.
Good luck!

[Pandora]

Update from lawyer: the trustee wants to raise payment to 1500 without 4 wheeler to cover equity in house and 1700 if we keep 4 wheeler. Not sure yet what we will do. We use the Polaris on farm and since we cannot buy another one for 5 years we may we may just have to cut back in other areas to make it work.

You need to weigh it all out for certain; what were you paying before you filed BK on everything? Break it all down and see what's best; look at it as just in secured items alone you're paying $948 out of your proposed $1700 payment (if keeping polaris); how much is equity that wasnt covered in exemption allowances, what other items are you mandated to pay back, etc etc etc. Obviously the trustee's payment is in the difference of $742 - and unsecureds as well. Put it all on paper and see what income vs outgoing equates to - it may be that the trustee doesnt think you can afford the payment based on realistic expense allowances for day to day living.

[AKB]

We live in Alabama so we are only allowed 10000.00 for both of us on homestead exemption. Trustee says we have 16000.00 equity. My lawyer doesn't seem to be arguing anything with trustee. We told lawyer we used Polaris for farming.

[walkthaplank]

What is being used for valuation? Did you pay to have a full appraisal? It is usually money well spent.

[AKB]

They used county tax appraisal.

[DebtEnder]

County tax , lol. Get a real one done by a CR and not one paid to get high values so your property tax is higher. This will cost you around 350-400 or so. If they have to go to court for it it's often a per day charge, depends on the appraiser. Could still be worth a few thousand if it saves you the hassle of moving and losing a farming income. You want a liquidation value. In other words what price would it take to sell this within 30 days.

[walkthaplank]

Get a complete appraisal where the appraiser supports their amount with facts and comps. I bet the value will be substantially lower than the amount in the county tax assessor's valuation. I had an appraisal on mine and it came in substantially (almost $60k below if I remember correctly) what zillow had listed for an appraised amount. This is not something you want to screw up. If you have equity, you are going to be paying for it, if you really don't have equity, you don't want to pay for it, or if you do, you want the actual equity, not some computer generated tax assessment.