House Payment in Plan

[mike14]

After reading several posts, I realized I don't understand what happens to our mortgage payment within the plan. Is the trustee required to make sure all payments are made by the end of the 60 months? More worrisome, where does the Trustee's percentage come from? Bottom line, will I have the same principle due at the end of 5 years with the payment in the plan as I would have if I'd made the payments on my own?

We were offered the chance to choose, since all payments were up to date. Our attorney recommended we put our payment in the plan as a way to "make things easier". Was this a mistake?

Thank You.

[IamOld]

INteresting - is your atty suggesting that that is the Trustee's "preference?" Because the Trustee's percentage is on ALL payments made through the plan...

[klandsb]

Hi Mike. I am in the Pittsburgh PA area and the trustee here requires the pmts to be made by them. At first I was so upset about it but close to 2 yrs in I am thrilled I dont have to make the pmts every mth. They send my house pmt, heloc and car pmt every mth (usually around the 28th) . At the end of the 60 mths the creditors get there share in a lump sum pmt.
So I hope I answered your question.....

[forgotten]

The trustee will make all the mortgage payments. It is no different as far as you are concerned as if you made them yourself, the amount due at the end of the plan would be the same as if you had paid it.
The trustee percentage only really affects you if you are in a 100% payback (paying back all of your unsecured creditors in full). If you are not then your payment is the same either way. If you are in a 100% payback then you would be paying the trustee percentage on the mortgage payment as well.

[mike14]

Thanks

Thanks. We are around 40% payback over 60 months. My concern was that the Trustee "fee" on the mortgage payment would decrease the amount paid on the principle which would leave us at a higher principle owed at the end of the plan. The way I understand all of your comments is that the Trustee percentage on the mortgage payment will simply reduce the payback to the other creditors.

Since it doesn't make any financial difference to us as to which way our mortgage is paid, and since the Trustee will benefit from a considerably larger fee (in our case 66% of his fee will be from the mortgage and 33% from what we are paying the creditors) I am wondering if the occasional attorney doesn't include secured payments in order to pad the Trustee's fee with the idea that someday he/she might get a favor returned ??

[newbie2]

Thanks. We are around 40% payback over 60 months. My concern was that the Trustee "fee" on the mortgage payment would decrease the amount paid on the principle which would leave us at a higher principle owed at the end of the plan. The way I understand all of your comments is that the Trustee percentage on the mortgage payment will simply reduce the payback to the other creditors.

Since it doesn't make any financial difference to us as to which way our mortgage is paid, and since the Trustee will benefit from a considerably larger fee (in our case 66% of his fee will be from the mortgage and 33% from what we are paying the creditors) I am wondering if the occasional attorney doesn't include secured payments in order to pad the Trustee's fee with the idea that someday he/she might get a favor returned ??

There is nothing behind a mortgage payment (or other secured payment) being paid by the trustee that is underhanded or sinister or otherwise. A Chapter 13 plan is one of the most difficult things to complete successfully. Here is the way I look at it: If the mortgage is being paid by the trustee instead of the debtor, there is a greater chance of the plan being completed. Why? Because the debtor won't fall behind on a secure debt payment thereby jeopardizing the plan. Yes the trustee makes more money (because of the percentage) but the plan has a greater chance of succeeding.

[forgotten]

Because the debtor won't fall behind on a secure debt payment thereby jeopardizing the plan. Yes the trustee makes more money (because of the percentage) but the plan has a greater chance of succeeding.

While I understand that theroy, and do believe that is the reasoning that is used, it still seems odd to me. I do not see how you would be less likely to fall behind in a $500 BK payment + $1000 mortgage than you would be a $1500 trustee payment.

[newbie2]

While I understand that theroy, and do believe that is the reasoning that is used, it still seems odd to me. I do not see how you would be less likely to fall behind in a $500 BK payment + $1000 mortgage than you would be a $1500 trustee payment.

Many trustee payments are taken directly out of a debtors paychecks. Those that send them in probably make sure the trustee gets paid, and on time.