Case Update...Plan Confirmed....1 month in

[alorth]

After all was said and done, our 13 Plan was confirmed over 1 TT objection on 5/16. It is a step plan that will go to a higher pmt after 1 year.

We are staying in the house.....which is a huge relief to me. Now lets hope the economy doesn't tank again.

The Plan specifies we turn over all of our tax returns for the next 5 years as well, which are usually 5k plus.

The one thing the Judge demanded in order to confirm was that our Plan pay back $70k to the Unsecureds. That is in addition to the payback of the Secureds (the 2 cars) and the TT fees, Atty fees, etc.

So that means we need to pay something like a total of 95k over the next 5 years, and we agreed that we would make a balloon pmt at the end of the 60 months to cover whatever amount we happen to be short....with the idea that the Balloon Pmt would come from a 401 k loan to ourselves that should be far less than 10k, if we even need to do it at all.

Its written right into the Plan that way.

The only thing I'm wondering is if I do end up going back to work in a year or so, I guess that will alter the Plan. It may even push us to 100% Payback to the Unsecureds if that happens. But I guess we'll cross that bridge when we come to it.

The Plan as written calls for 49.5% payback to the Unsecureds if they all claim, BUT its looking like we may get away with almost $20k in creditors NOT putting in claims, which will move the percent payback significantly higher. That number is pretty solid.

In fact, the Claims deadline is June 29.....so roughly 2 weeks away. We have our fingers crossed right now because there is roughly $40k not listed as claimed on the 13datacenter right now. We still think that half of that number will show up "just before the deadline", but who knows?

Bottom line, things are tight. Its no fun living this way, but I guess its livable. At least we don't have to move, which was my #1 worry, and I think we can complete the Plan as written....I'm pretty confident.

1 Month Down, 59 to go.

[TheBajan]

Alorth,

I am sooo glad to hear this update! Congrats! You will make it through!

The Bajan

[keepsmiling]

Hey, Alorth, been wondering what's up. Congrats on getting this far! I know it's been a long road for you.

I don't think I've heard anyone else report a similar story with a finite payment vs just dmi. Interesting. I guess your judge was pretty tough after all. But it sounds like it turned out ok after all. Just think where you will be 59 months from now-- sitting VERY pretty!

Best of luck to you, and hope you will keep posting.

[momofthree]

That's awesome that you get to stay in your home! As far as claims, you should really check them on pacer, 13datacenter tends to run way behind on postings. My lien strip didn't get posted until months after it was recorded in Pacer.

How did your daughter's school pan out? Does she get to stay in the Montessori program for at least a couple of days each week?

[Pandora]

congrats on getting your case confirmed, know its been a long time for you in dealing with all of this.

I still think that its wrong the courts allow step plans as well as balloon payments in any Ch. 13 though; to me thats a recipe for disaster. I know there are some posts on here that have had to deal with that same issue so make sure you read them.

[keepsmiling]

congrats on getting your case confirmed, know its been a long time for you in dealing with all of this.

I still think that its wrong the courts allow step plans as well as balloon payments in any Ch. 13 though; to me thats a recipe for disaster. I know there are some posts on here that have had to deal with that same issue so make sure you read them.

Yes, really. I mean, where is that balloon supposed to come from for most people? Retirement plans are supposed to be sacred. Alorth was warned that the tt and judge were a new breed and wouldn't make it easy.

We would like to hear more about the upshot with the schooling, the house payment etc. Maybe you can write a book about your experience while you are still home. We can add it to the BK Forum Booklist . Some great stories out there--- Treehugger's, JB's, Olivies, CoBelle's come immediately to mind. We should do it!

[alorth]

That's awesome that you get to stay in your home! As far as claims, you should really check them on pacer, 13datacenter tends to run way behind on postings. My lien strip didn't get posted until months after it was recorded in Pacer.

How did your daughter's school pan out? Does she get to stay in the Montessori program for at least a couple of days each week?

As far as the Montessori went, we were able to negotiate with the school based on our situation, and the fact that our daughter has gone the last 2 years. She will go one more year....basically her Kindergarten year......at just less than half price, with a non-binding, but good faith promise from us that we will "make it right" after our 13 is over, which is our full intention.

She will then go to Public the next 4 years, and maybe switch to Catholic after we are out of BK, though that depends on how things go in the Public system.

Our Plan has a step next year which will account for the end of the Private schooling and move to public school, so we will pay a little more the last 4 years.

We were only allowed something like $150/month towards schooling in the final budget, but we have some to make up the difference in our exempt savings fund, and a little help from family, so we're happy it worked out. She will go full day this year and complete the 3 year plan we had originally intended.

[alorth]

Yes, really. I mean, where is that balloon supposed to come from for most people? Retirement plans are supposed to be sacred. Alorth was warned that the tt and judge were a new breed and wouldn't make it easy.

We would like to hear more about the upshot with the schooling, the house payment etc. Maybe you can write a book about your experience while you are still home. We can add it to the BK Forum Booklist . Some great stories out there--- Treehugger's, JB's, Olivies, CoBelle's come immediately to mind. We should do it!

It is a strange Plan by all accounts. Nothing in it says $70k OR DMI, whichever is greater....it just says $70k must be payed to the Unsecured Creditors (the Judge's decree, and decision), which means we need to pay in about $95k total to cover the Secured creditors (cram downs on 2 cars), our atty. fees, which are $3300 in the Plan, plus administrative and trustee costs.

I have a feeling however, that DMI will come into play somehow during the Plan....especially after my surgery and when I go back to work, which will force us to file an amended Plan.

The Claim Deadline for Creditors just passed. Out of roughly $142,000 in Unsecured, roughly $32,000 did NOT claim! The 2 biggest Creditors that did NOT file a claim are Capital One and Starwood (Time Share). So that means the percentage pay-out to the Unsecured Creditors will be based on @ $110,000, which at $70k payback is roughly 63.5% payback.

We almost escaped with Chase not filing claims too, but the Chase debt (2 different accounts) went to 2 different JDBs, Portfolio Recovery and Mainstreet Acquisitions, and they both filed their claims in the last week and a half.

I verified all of this through PACER.

So if get back to work next year, and the Plan is amended to account for whatever income I can contribute, that may push us into a 100% payback of the CLAIMED Unsecured debts, which I actually hope can happen.

One obstacle we have already had to overcome had to do with the house. Keep in mind its only a 10 year old house! But we had to put $500 into a new well pressure tank and some associated work. That came right out of the small savings cushion of exempt funds that we have, and it really hurt to spend that $500! I hope we don't run into too many more similar circumstances. I truly love this house, and I am happy we get to stay, but that definitely is the one major drawback to staying here, is that we are responsible for the maintenance and any emergency repairs, whatever they may be. And housing values have continued to drop in our area, as well. We just may have to revisit our decision to stay (and the court's "permission" for us to stay based on the Plan they confirmed) before this is all said and done.

[alorth]

And I should quickly add that the reason for the balloon pmt. at the end is because the DMI will not reach that 70k payback plateau as things are now based on our schedules and forfeiting ALL of our tax refunds the next 5 years (their estimates based on our average return the last 10 years - it doesn't vary much), but that is the requirement we had to agree with to get the Plan confirmed, and stay in the house, and send our daughter to Montessori for this one more year...so a balloon pmt it is at the end, and it will be out of a 401k Loan to ourselves.

IF the DMI OR 70K language had been in the Plan, then I am guessing that the TT could ask - or require - a LARGER balloon PMT at the end, rather than just the balance to get us to 70k. Having that hard 70k figure kind of protects us, while at the same time presenting quite a challenge since it IS actually over our DMI estimate as it stands now by several thousand dollars.

[karm43]

Congrats! But I'm thinking this must be becoming the trend. Sounds like your getting in debt already. I know your happy to be confirmed. I really think their gonna need to start looking at the bk laws, cause it seems like every district is starting to have their own rules, at chap 13 expense.

[karm43]

I thought chap 13 was about getting out of debt, not having to make people take out their 401 plan to pay at the end. Again I am happy that you kinda know where your plan is goin, but........

[keepsmiling]

I'm guessing the tt/judge were thinking: dmi = whatever current payment is PLUS one year Montessori + difference in home allowance from IRS charts (somewhere around 900/mo if I recall- or some percentage of that) x 60 = 70k.
This was a compromise so that OP could stay in the house and school.