Ok you lawyers - weigh in for me please...

[Pandora]

Okay, so I keep reading that to pay off your CH. 13 early you must pay back 100% to all unsecured creditors... but - herein lies a huge question / concern in that area:

If the only thing you filed Ch. 13 for was to strip your 2nd mortgage, and the only other claims were attorney fees and pers. prop. taxes (both paid 100%); strip is approved.... then how is it that you can be required to pay it back at 100% to get out early? To have the ability to strip a 2nd, but then the "requirement" to pay it back 100% to get out early seems to contradict everything that a strip is about. ?? I understand it was secured and to strip, changed to unsecured - but if I had other debt (secured or unsecured) the 2nd would get nothing essentially. In our case, its our only debt; our entire Ch. 13 base plan was based upon assets we chose to keep (autos) (Ch. 7 liq. test).

The reason this is confusing to me is because while I see everyone posting "no early out unless 100% payback" - our lawyer and trustee state something entirely different in all paperwork as well as upon being asked directly. It states we can pay off early (36 month vs. 60) due to 1. under median, and 2. that priorities were paid 100% (pers. prop taxes) and the 2nd is being stripped, although being paid @ 34%. It states to pay out early we must pay off the base plan on confirmation order - not full amount of claims filed.

I dunno, maybe its just my way of thinking... but to keep seeing that we must pay 100% of all unsecured claims to buy out @ 36 mos. vs. 60 on the forums, yet lawyer / trustee say something entirely different just confuses the hell out of me. I dont know what to think at this point....

ugh.

Thanks in advance.

[kornellred]

For debtors who have high unsecured (read: credit card) debt, Chapter 13 provides, in many cases, an enormous amount of debt relief. For instance, in my own case, I am paying back about $16,000 on $75,000 worth of debt. I have already paid close to $13,000. If I had the $3000 necessary to fulfill my plan base amount, could I then skip the remaining 14 months of my plan payments? Nope. Not a chance. That would make Chapter 13 a pure debt settlement function.

Lien stripping of 2nd mortgages in Chapter 13 bankruptcy is a "horse of a different color". It's kind of amazing that it is actually allowed - it seems like more of a concession to the debtor (on the government's part) and really leaves the 2nd lien holder with next to nothing. It is the fact that the 2nd lien is nullified that makes the debt unsecured, because the creditor is left with no legal entitlement to recoup losses after completion of the Chapter 13.

It sounds like you actually have a "pay out early" option. You mention that you were "under median" - that is a huge factor with respect to the ultimate disposition of your case. Most people attempting to opt out of Chapter 13's via early pay out have high unsecured credit card debt that is not being repaid at 100 %.

[HHM]

I don't know the answer for sure...but as Kornellred points it, it probably has to do with the fact you are under median and that there are no "other" class IV creditors other than the 2nd mortgage.

[momofthree]

Ditto the others, it's because you're under median, so you had the option of 36 months from the get-go. It's not really any different than you deciding now to amend your plan to 36 months and re-aging the base over the remaining months (which should also be an option) because you're under the median. An over-the-median filer would not have that option.

[Pandora]

Thanks Kornell, HHM and Momofthree - appreciate the replies and explanations. I'm guessing thats the reason as well (under median / no other claims) but it sure confuses the hell out of the "no buyout unless 100% payback to unsecureds."

Not that we can pay out early, but.... if the opportunity ever presented itself to do so - I think we would so long as the 2nd didnt have to be paid 100%.

Mom - you mentioned amending / re-aging remaining debt - if thats done, does it still go back to org. file date / income / percentage or will it all be done based on the time of amendment and excess DMI over and above what you were org. paying?

[momofthree]

Mom - you mentioned amending / re-aging remaining debt - if thats done, does it still go back to org. file date / income / percentage or will it all be done based on the time of amendment and excess DMI over and above what you were org. paying?

Good question! I have no idea. It makes sense that you'd have to submit a new schedule I/J showing you can afford the higher payment, but if you show extra DMI over that amount, they might want that too. But as far as if you're over the median when you amend, I don't think that matters because at the time of filing, you qualified for the 36-month term. As you know, I've been wrong before, this is my educated guess, lol. As always, consult an experienced attorney. :P

[Pandora]

LOL! Hmmm... well... looks like 60 months is looking better and better at this point vs. bringing any attention to anything huh?

44 more payments to go... YAY...? :/