Is the trustee allowed to make judgements?

[SinkingFast]

You live in a larger Metro area, right??

If that's the case, there's probably been a fair number of New Law cases filed already.

We're in the boonies, so to speak. There haven't been a whole lot of New Law cases filed yet. Attnys and the Court are still working out ground rules. Interpretations. What's gonna be allowed and what isn't.

Attnys know what they can file in the way of expenses based on previous experience with the Court. Regardless of the IRS schedules saying I can claim $1300/month for food for 6 people, it's gonna be a stretch for me to get $1100 thru. The Court is used to seeing $1000 for 6 people. That's it. Pure and simple as that.

It's only partly about the law. It's also partly about the Court where you file. What the Court is used to seeing. What the Court typically allows.

If you get more, you'll have to have a reasonable explanation for the excess or the Court is not going to allow it.

Not just the Trustee. The Judge as well.

[aa06a47]

Concern: Can the trustee remove my secured debt deduction and force me into Chapter 13.

Lets assume the trustee can do just that. They remove my secured debt deduction from my Means Test, and now I am forced to convert to chapter 13.

In Chapter 13 the secured debt deductions comes back again. The language is the same. The trustee has to either deny it or accept it when calculating disposable income.

If they accept it, I have negative disposable income and therefore no payment in Chapter 13. In that case the unsecured creditors would be worse off than in Chapter 7, so it fails the "In the best interest of the creditors" test.

If they deny the debt deduction I would have disposable income to pay the Trustee of approximately $3,500 a month. However, I would still have the residence, which would immediately head into foreclosure. Since I am upside in the value of the house this in essence would punish the secured creditor and allow the unsecured creditors preferrential treatment by receiving my monthly payments. This goes against the concept of preferential treatment to the secured creditors over the unsecured creditors.

In conclusion denying my claim of secured debt on the Chapter 7 "Means Test" would seem to be an indefensible position for the Trustee. It further points to the fact that the allowance for secured debt deductions is there specifically for the benefit of the "Secured Creditors," because if you took it out "Unsecured Creditors" would get paid in Chapter 13, and "Secured Creditors" would eventually be left trying to sell property.

Feel free to comment on my logic.

I have that issue as well, my issue isn't so much the house payment, but the 401k loans. My lawyer even commented that I was one of the few helped by the new law.

You will be required at a minimum to pay back in a chapter 13 as much as you would pay back in a chapter 7...that is the thing you have to keep in mind. If you don't want to lose property, you must pay for it in the chapter 13. So, given the attorney said my chap 13 payment was like 180/month, I will end up paying a little more to not have to give them my lawn mower.

Now, since you have negative equity in your home, if you pay 1 dollar a month, they creditors would be getting more than they would under a liquidation.

And as a foot note, no, they cannot take away your secured payments (yet). I think one thing the credit industry didn't think about when they created the means test is that it really didn't change the law as related to "expenses". As of right now, the trustees do not interpret the law to mean you can only have a house payment or car payment equal to what the means test says.

[alh]

It's interesting with the new law. If you are in a Chapter 13 and you are over median income, you have to use the IRS expense guidelines by law. That can work both ways. If your expenses are under those numbers you are still required by code to use those expense numbers. So in some situations it can actually help people. I saw a link to this somewhere on another site. I'll see if I can find it.

There are a lot of situations where someone could have a very high house payment for a particular income. I know a couple with a 1/2 million dollar house that both lost there jobs at the same time.

You do not have to justify to the trustee why a particular secured loan is a certain amount. That is the job of the person who approved the loan.

[aa06a47]

It's interesting with the new law. If you are in a Chapter 13 and you are over median income, you have to use the IRS expense guidelines by law. That can work both ways. If your expenses are under those numbers you are still required by code to use those expense numbers. So in some situations it can actually help people. I saw a link to this somewhere on another site. I'll see if I can find it.

There are a lot of situations where someone could have a very high house payment for a particular income. I know a couple with a 1/2 million dollar house that both lost there jobs at the same time.

You do not have to justify to the trustee why a particular secured loan is a certain amount. That is the job of the person who approved the loan.

But, you only use those expenses in the means test, not in the "plan". Don't confuse the two. WHile the new law will force more people into the 13, the plans will end up being similiar.

[alh]

I believe it is the same number for the plan. I will have to find the citation in the law and try to get back later. Of course I could be wrong. Happens a lot

[aa06a47]

I believe it is the same number for the plan. I will have to find the citation in the law and try to get back later. Of course I could be wrong. Happens a lot

When my attorney worked up my 13 (I have not filed yet), she used actual expenses...house payment actual, utility bill actuals, car payment actuals..ect. She did not utilize the means test guideline amounts for anything other than the means test. Perhaps I missed something she was doing when she figured them, but I was setting where I could see her input the stuff in the computer.

[alh]

Just curious. Are you above or below median?

[SinkingFast]

When my attorney worked up my 13 (I have not filed yet), she used actual expenses...house payment actual, utility bill actuals, car payment actuals..ect. She did not utilize the means test guideline amounts for anything other than the means test. Perhaps I missed something she was doing when she figured them, but I was setting where I could see her input the stuff in the computer.

IRS fig's are for the Means Test.

Aa is talking about Schedules I and J where actual expenses were used.

That's how one attny fig'd a Ch 13 plan for us. He took Hubby's net income, deducted expenses he felt he could get thru the Court, and came up with a $197/month payment plan.

[FoolAndHisMoney]

That is exactly what I would like to do. However, I can not get a straight answer on the secured debt deduction portion of the means test. If I intend to walk away from the house do I still get to use the secured debt deduction on the means test, or do I need to reaffirm the debt? If I can't use the secured debt deduction on the means test I will not qualify for Chapter 7. At that point I would most likely face a Chapter 13, with an approximate $2,500 a month payment to the trustee for 60 months.

I understand I got myself into this, but paying $150,000 over the next five years sort of takes the incentive out of working at all. A better strategy would be go live on a beach for 6 months to a year, and come back with zero income an easily qualify for Chapter 7.

Check pacer for other filers in your area and situation and see how theirs played out.

[FoolAndHisMoney]

They did set up an order of succession, as it were, for Creditors.

In a Ch 13, 2 people are paid regardless. The Trustee get's their take every month. The first few payments of the Ch 13 plan go right into your attny's pocket. Attnys who file Ch 13 are paid the remainder of their retainer out of plan payments before any Creditors ever see a penny in payment.

Priority Creditors are at the top of the list after the attny is paid. The IRS, Child Support Payments, Alimony, etc.

Secured Debt is 2nd. Secured is to be paid after Priority and before Unsecured. That is true.

Unsecured Creditors are on the bottom rung of the ladder and will receive the smallest amount. Not only in dollars, but in % as well. What ever dollars are left after the Priority and Secured Creditors have been paid is split amongst the Unsecureds. If you have 10 hands out and $100 left, each Unsecured only gets $10/month.

You're so right! That's why I still can't figure out why the unsecured credit card lobby paid billions for reform. There's still nothing in the new law for them. The politicians got paid, the secured creditors will get paid, the trustee will get paid and last but not least the lawyers will get paid. What does MBNA get for stirring up the reform shit storm?

[djk]

You're so right! That's why I still can't figure out why the unsecured credit card lobby paid billions for reform. There's still nothing in the new law for them. The politicians got paid, the secured creditors will get paid, the trustee will get paid and last but not least the lawyers will get paid. What does MBNA get for stirring up the reform shit storm?

the new law narrows the qualifying field of petitions for C7 plus the fact that MBNA does a hell of a lot of secured loans.

[SinkingFast]

the new law narrows the qualifying field of petitions for C7 plus the fact that MBNA does a hell of a lot of secured loans.

And then there are the CC purchases that are "secured".

Buy a washing machine and dryer at Sears on a Sears card. Secured. Sears is backed by Citi.

Buy a stereo or computer or TV at Best Buy on your Best Buy card. Secured. Best Buy is backed by Beneficial.

Chase, Citi, MBNA, Bank of America, etc,............ Are also Mortgage Lenders and Auto Loan Lenders, and RV/travel trailer/motocycle/etc. Lenders.

All Secured loan stuff.