1year to go Chapter 13, payment went from 1k to 7k

[bk2013]

More than a year ago we fell behind on our Mortgage by 3 months and the lender accelerated payments (pmt outside chapter 13). Soon after this, we notified our attorney and contracted a real estate agent to do a short sale. Some months later we received a letter from Trustee saying they had no objection to selling, I presume this was up to the court. We've had close to 80 showings, no viable offers bank would accept. Recently the Trustee has modified our plan and our payment has gone from 1k per month to 7k per month, which we can't pay. The basis for this increase was in part due to the fact that we have not been paying the mortgage for over a year; however, we did not hide this, it was communicated immediately upon getting notice from the lender. Also, the Trustee went back to our tax returns from 2010 and 2011 and added the increase in salary (worked 2n job plus received promotion/yearly salary increases) that we received for those 2 years. Since we only have 12 months to go on a 60 month plan, the payment has increased by 6k. My attorney has suggested that we convert to a chapter 11 to extend the time period since chapter 13 can't go past 60 months. We are about to have a breakdown as we were so close to completing the plan and now we must come up with more than 80k in less than 12 months or our case will be discharged. I also thought that converting to a chapter 11 would add another 3 years to our bankruptcy history going from 7 years to 10 years. Any thoughts on how to best approach this would be greatly appreciated! Is ok for us to talk directly to the Trustee?

[LadyInTheRed]

I also thought that converting to a chapter 11 would add another 3 years to our bankruptcy history going from 7 years to 10 years.

Are you talking about how long a BK can stay on your credit report? That really should not have any bearing on your decisions at this point!

Any thoughts on how to best approach this would be greatly appreciated! Is ok for us to talk directly to the Trustee?

Don't talk to the trustee. That's what you have an attorney for. The trustee probably won't talk to you anyway.

Other than that, I don't know what to suggest as I have no experience with a situation like yours and have never read of one. But, some questions come to mind. Providing answers and perhaps giving more details on your income, debts and assets may provide some insight that will help others to help you.

Do you not feal your attorney is doing an adequate job of representing you?

Why are you trying to do a short sale instead of modifying the plan to surrender the home and have the debt discharged?

Did you tell your attorney about your increases in income when you got raises and took a 2nd job?

Did you contact your attorney wheny you first knew you would fall behind on your mortgage payments? What caused you to fall behind on the payments?

[HHM]

Unfortunately, that is quite a pickle. Sounds like a very aggressive trustee.

Note, the trustee cannot "just increase" your payment. The trustee must file a Motion to Modify and that motion can be opposed. Sounds like that didn't happen. You won't accomplish anything by talking to the trustee directly. If the plan has already been modified, depending on how long ago this modification took place, you either need to file a motion to reconsider or file a motion to modify. The trustee is NOT the decision maker, he is your opponent. The judge ultimately makes the decision, but to get in front of the judge, you most either oppose the motion or file a motion requesting the court to do something.

Note. I diverge with LITR's comment about your attorney. Active representation in a chapter 13 tends to end upon confirmation. About all you get after confirmation is monitoring, but to have your attorney do something, you generally need to pay.

[TheBajan]

More than a year ago we fell behind on our Mortgage by 3 months and the lender accelerated payments (pmt outside chapter 13). Soon after this, we notified our attorney and contracted a real estate agent to do a short sale. Some months later we received a letter from Trustee saying they had no objection to selling, I presume this was up to the court. We've had close to 80 showings, no viable offers bank would accept. Recently the Trustee has modified our plan and our payment has gone from 1k per month to 7k per month, which we can't pay. The basis for this increase was in part due to the fact that we have not been paying the mortgage for over a year; however, we did not hide this, it was communicated immediately upon getting notice from the lender. Also, the Trustee went back to our tax returns from 2010 and 2011 and added the increase in salary (worked 2n job plus received promotion/yearly salary increases) that we received for those 2 years. Since we only have 12 months to go on a 60 month plan, the payment has increased by 6k. My attorney has suggested that we convert to a chapter 11 to extend the time period since chapter 13 can't go past 60 months. We are about to have a breakdown as we were so close to completing the plan and now we must come up with more than 80k in less than 12 months or our case will be discharged. I also thought that converting to a chapter 11 would add another 3 years to our bankruptcy history going from 7 years to 10 years. Any thoughts on how to best approach this would be greatly appreciated! Is ok for us to talk directly to the Trustee?

I don't have any knowledge but there are others here with much more wisdom who I'm sure can and will be along to help. Please give us more info as LadyintheRed has suggested. The more info about your specific circumstance, the more accurate advice can be offered.

What you are describing is nothing short of terrifying to me. We are only seven months into our plan and in that time I've taken a part time job, and my husband has worked quite a bit of overtime that we didn't have when we filed. Even though I've notified our atty, I know he didn't consider it substantial enough to notify the trustee. I hope it doesn't come back to haunt us. I can't even imagine have my payment increased 7-fold.

Please do let us know how things turn out.

[HHM]

I don't have any knowledge but there are others here with much more wisdom who I'm sure can and will be along to help. Please give us more info as LadyintheRed has suggested. The more info about your specific circumstance, the more accurate advice can be offered.

What you are describing is nothing short of terrifying to me. We are only seven months into our plan and in that time I've taken a part time job, and my husband has worked quite a bit of overtime that we didn't have when we filed. Even though I've notified our atty, I know he didn't consider it substantial enough to notify the trustee. I hope it doesn't come back to haunt us. I can't even imagine have my payment increased 7-fold.

Please do let us know how things turn out.

I wouldn't worry too much Bajan, the OP had a triggering event that prompted the review -- request for short sale. Trustees rarely, spontaneously review a confirmed case. Now, in some districts, trustees want to see copies of tax returns each year etc. But in general, unless the trustee has an established practice of requiring ongoing reporting by the debtor, once the plan is confirmed, it will only be a debtor initiated event that triggers any sort of review by the trustee that "might" lead to a modification.

I wouldn't let this one persons trouble deter you from chapter 13 success.

[TheBajan]

I wouldn't worry too much Bajan, the OP had a triggering event that prompted the review -- request for short sale. Trustees rarely, spontaneously review a confirmed case. Now, in some districts, trustees want to see copies of tax returns each year etc. But in general, unless the trustee has an established practice of requiring ongoing reporting by the debtor, once the plan is confirmed, it will only be a debtor initiated event that triggers any sort of review by the trustee that "might" lead to a modification.

I wouldn't let this one persons trouble deter you from chapter 13 success.

Thank you for the encouragement. I really do count my blessings. I have confidence in our atty and according to him we only need to make sure we submit our tax returns. I know you're right. We keep making our payments, stay on budget, and save a little for a rainy day. We'll get there...

Thanks again,

The Bajan

[LadyInTheRed]

Note. I diverge with LITR's comment about your attorney. Active representation in a chapter 13 tends to end upon confirmation. About all you get after confirmation is monitoring, but to have your attorney do something, you generally need to pay.

Actually, I dont think we disagree on that. I didn't see anything in the post to suggest the attorney hadn't done his or her job. I asked whether OP thought his attorney was not doing an adequate job because he/she apparently doesn't trust the advice to convert to a Chap 11.

[despritfreya]

I asked whether OP thought his attorney was not doing an adequate job because he/she apparently doesn't trust the advice to convert to a Chap 11.

And, apparently the attny has not given "proper" advice. OP cannot convert to a Chapter 11 as he/she has a confirmed Chapter 13 Plan. See 11 USC 1307(d). Now, if he/she files a Motion to Convert a hearing on the motion must be held. I assume the UST would pick up on this issue at that time.

Des.

[angel7821]

I would get in touch with your attorney and fight the trustee on the payment increase. If your house has not sold and you are still making mortgage payments how does the trustee figure you have all this extra money? Could the OP have his attorney redo the I&J schedules to show they don't have this kind of extra money to pay in?

[keepsmiling]

I would get in touch with your attorney and fight the trustee on the payment increase. If your house has not sold and you are still making mortgage payments how does the trustee figure you have all this extra money? Could the OP have his attorney redo the I&J schedules to show they don't have this kind of extra money to pay in?

OP has not paid mortgage for over a year.
I still don't get why anyone would mess around with the aggravation of a short sale when you could just surrender. Seems like lame legal advice all the way around.
But that must have been some mortgage and some raise to increase the payment that much. We def could use more info. OP, where are you? And what took you so long to come out of the closet lol???

[forgotten]

I agree with others, why not modify your plan to surrender the home? The trustee saw an extra $72k from not making your mortgage payment and your raise from the past year? If these numbers are accurate I have to ask where all that money actually went?

I would say modify your plan to surrender the home and work out a payment plan that you actually pay and try and the court to approve it, show the court you are really trying to pay every penny that you can. Other than that if you would still be below CH13 debt limits after the past 4 years interest and late fees added back in I would dismiss the case and refile (surrendering the home this time).

Edit: I know nothing about CH11 other than every attorney spoke with trying to do anything they could to not have to make me file a CH11 as I was close to the unsecured debt limit.

[HHM]

And, apparently the attny has not given "proper" advice. OP cannot convert to a Chapter 11 as he/she has a confirmed Chapter 13 Plan. See 11 USC 1307(d). Now, if he/she files a Motion to Convert a hearing on the motion must be held. I assume the UST would pick up on this issue at that time.

Des.

Good catch

[justbroke]

Most Chapter 13 Trustees that I am familiar with usually won't bother a debtor if they are in plan. When a triggering event, such as this occurs, the Trustee could get "interested" in examining just precisely what went wrong. I would also follow HHM's advice to have your attorney fight the Motion to Modify or ask for reconsideration. I never knew that a Chapter 13 Trustee can "retroactively" try to recover "old" money accumulation, but that may not be the case.

If your tax returns were provided each year, then the Trustee already should have known about the extra income. It may have been that you were also not paying any housing costs, and that is what made the Trustee ponce.

You may need to dismiss and then file a Chapter 11, which probably won't be cheap. And, you'll have a new case. If the lender files a motion for relief, you have other problems as well regardless of conversion/dismissal/re-filing.

The new Chapter 11 would be a new 7 year credit reporting event since you cannot convert.

[bk2013]

Thank you all for your thoughts on this issue. As some suggested I no longer trust my attorney. As soon as we received notice from our lender accelerating mortgage payment (lender actually returned partial payment back to us $ 1,500) I emailed our attorney for advice . We asked what is the best option: 1) Short sale 2) Died in lieu 3)Foreclosure. The attorney replied that we were free to choose any of the three. So I emailed him back saying that we had engaged a real estate agent. Three months after we received a letter from the Trustee saying they had no objection to the short sale, this was Oct 2011. My guess is that our attorney never disclosed the fact that we were no longer paying rent. We received an offer around Mar 2012 which we submitted to our attorney. As justbroke stated, this was probably the triggering event. What I find unfair is the fact that we submitted tax returns for every year so the Trustee could see our wages every single year and we reported the fact that we were not paying rent right away but it took over a year for the Trustee to modify our plan; by then we only had 11 months to go on our 60 month plan. I believe our attorney never told the Trustee about the mortgage payments, once the Trustee looked at the tax returns and saw a significant drop in mortgage interest they figured that we were trying to get over and they simply hammered us. I asked for a breakdown of how they arrived at the 7k figure. The Trustee simply added the remaining balances to pay off 100% of the unsecured creditors and divided that balance by 11 months. I am going to contact another attorney and see what our options are.

[bk2013]

Justbroke, can you recommend a good attorney in Florida?