Confirmed...Then Lack of Feasibility

[May2014]

Before confirmation of our plan, the Trustee objected because our plan payment was not high enough to cover everything. A judge overruled the objection and confirmed the plan. NOW we get a "lack of feasibility" notice for the same thing, though no motion to dismiss. No matter how I crunch the numbers that are showing up on NDC, the money works out, even with a bogus claim still on the table. plus, it makes absolutely no sense how the Trustee pays stuff...a little here, a little there, nothing there, a big heap there. Why don't they split each payment into 60 pieces and pay like a normal person?

So the plan isn't feasible, but I'm not sure if we can squeeze out any more money. We're struggling now, and our daughter was just added to our car insurance (when she gets a job she'll pay for it...but until then...). BUT, we make too much for a Chapter 7. Where does that leave us?

Attorney hasn't had a chance to dig into this yet, nor has he gotten around to objecting to the bogus claim. Has anyone else had something like this happen?

[kornellred]

If the BK Court judge overruled the trustee's objection once, there is a fairly good chance that it will get overruled again. Chapter 13 payments are based upon DMI - not on claims (bogus or legitimate). Trustees are not empowered to make decisions on the distribution of payments or the amount payable. It is all lock-step after confirmation unless the BK Court is petitioned to make modifications. Your attorney is in the best position to provide guidance.

[May2014]

Heard back from attorney, and the first thing he's doing this week is objecting to the mortgage arrears claim. Not only is the claim for a post-petition arrearage from June 1, but that "arrearage" was actually paid on June 16...just late, and we've paid the late-fee. That will pull $1089 out of our "must pay" and hopefully dismiss the trustee's concern. I guess we'll go from there...

[kmjatl]

From my case, it appears the pecking order of payments is Priority, Secured, Unsecured.

First my priority taxes were paid. Then my car loan. Then the credit cards.

[May2014]

We have 2 secured items (cars), 1 priority (pp tax), 2 undischargeable unsecured (student loans), 3 credit cards, a false claim (mortgage arrear), the trustee, and the lawyer.

The only claim that has received payment each and every disbursement has been the Trustee. Everything is paid erratically and the priority claim hasn't received a dime, which sucks because we need it paid to renew our car registration. The disbursements aren't making a whole lot of sense...

[justbroke]

Please do not worry about how, when, or why the Trustee pays certain creditors and not others. The creditors will be paid based on the confirmed plan. Any payment that is made on time to the Trustee, is an on-time payment to any secured creditor; regardless of when the Trustee distributes the money.

In fact, it is quite common for the first 6 months for the Trustee to make very few payments. Additionally, the Trustee only gets paid if they make a payment. In some Jurisdictions, the initial order establishing duties and such (usually right after all the schedules and initial plan are filed), contains language that the secured creditors maintain a sort of statutory lien on the payments received by the Trustee. This is to deal with something known as "adequate protection" to deal with depreciation of the assets. For those reasons, paying the Trustee is the same as paying the creditor.

As to the feasibility of your plan, it's a simple math question. It's whether your scheduled payments, when totaled, equals or is greater than the base plan amount. If you have post-petition claims, that surely could be messing with the math. You say that your attorney is on top of this, so let your attorney worry about this for now. That is what you pay the attorney to do... worry on your behalf and fight for you!