25 More Months....

[Aspensage7]

Hi All,

My husband and I are in Ch 13. Filed in June 2019 and will be finished by 2023. We are considering selling our home and moving closer to an ailing parent in another state. Our attorney says we can keep proceeds from house (in our case, it would be >100,000-200,000), which doesn't seem right. I asked how much we still owed if we wanted to pay it off sooner - and he didn't really answer our question. Has anyone out there sold a house while under Ch 13, and if so, did you keep all proceeds? Second question - was it difficult to find a house to rent while still in Ch 13?

Thanks, in advance, for any feedback!

[justbroke]

Welcome to BKForum Aspensage7 !

[This is a long response, but looks to a 2019 case out of Oregon and the 9th Circuit Bankruptcy Court of Appeals. These are just my ramblings as this presents an interesting topic -- Post-confirmation appreciation of pre-petition Assets in a Chapter 13.]

First, the value of your property was set at the time that you filed. From what I understand, and this is not a legal answer, the Chapter 13 bankruptcy estate is not entitled to the appreciation of most pre-petition property over the life of the Chapter 13. The plan may make provisions specifically for appreciation, but they usually don't mention it. (This is actually a contested viewpoint between some circuits. The 1st Circuit says that prepetition appreciation is property of the bankruptcy estate... and there may be others.)

Second, you may be lucky. The Bankruptcy Appellate Panel (BAP) for the 9th circuit, recently (2019) reversed the lower bankruptcy court regarding the appreciation value of a pre-petition property in a confirmed Chapter 13. Not only are you in the 9th Circuit, this reversal was an Oregon case. The case was Black v. Leavit (as Chapter 13 Trustee), 609 B.R. 518 (B.A.P. 9th Cir. 2019). The BAP found that the appreciation amount was not property of the bankruptcy estate and it belonged to the debtors.

Finally, your question regarding your payoff amount is too specific to your case. This is why your attorney doesn't know and usually will need a payoff quote from the Chapter 13 Trustee. It reads as though you're in a 4-year Chapter 13, but I don't know if you were under-the-median when you filed. If you were under-the-median, you could propose a plan for 36 months (while over-the-median filers must propose a 60-month plan unless paying 100%). Some of that may factor into what you'll need to pay in order to get out of your plan early.

despritfreya is in the 9th Circuit, but I don't know if he has seen this In Re Black case and it's impact on his State of Arizona.

Only read further if you want to read my read on the In Re Black case...

In the Black case, the court found that at confirmation, the property reverts back to the debtor. All values were set at that time so the plan is based on the bankruptcy estate created when the debtor filed. The debtor, Black, was going to sell the property to pay the Chapter 13 $44,000 which was the value of the property at confirmation. Luck would have it that the property appreciated and sold for $100,000. Black paid the Chapter 13 Trustee $44,000 and the Trustee filed a motion to modify the confirmed plan to include the entire $100,000. The lower court agreed.

On this appeal, in Black, the BAP agreed with Black that the Chapter 13 Trustee (and estate) was only entitled to the $44,000 as set at confirmation. The BAP also seemed to opine that the proceeds was not "disposable income" for purposes of the plan language. The BAP relied on an earlier decision they made in In re Burgie, 239 B.R. 406 (B.A.P. 9th Cir. 1999). That earlier decision concluded that "[w]hile a debtor may voluntarily use such proceeds to make payments to creditors under a chapter 13 plan, a debtor cannot be compelled to use the proceeds for this purpose... debtors cannot be compelled to use the proceeds from the sale of prepetition real estate to pay creditors under a confirmed chapter 13 plan."

Note: that the BAP also talked about whether the courts within the 9th Circuit are bound by precedence for decisions out of the BAP. The BAP concluded that the Bankruptcy Courts (the lower court) were not bound by the BAP's earlier decisions, but that the BAP is bound by it's own earlier decisions unless the full panel reviewed the case and came to a different conclusion. In other words, your attorney may still get some flack from the Chapter 13 Trustee, or just mentioning the In Re Black case will be enough.

[justbroke]

Also, you asked about renting. Yes, you can rent in an active Chapter 13, but it will depend heavily on your credit score and your employment. If you are not employed, some large corporate landlords will allow you to use cash reserves if you can prove you have at least 6-12 months of cash reserves. Other landlords may allow you to prepay a certain number of months and also require the maximum allowable deposit for that State.

I rented near the end of my Chapter 13. I rented what's colloquially called a "luxury" apartment complex (lots of amenities). They ran my credit and approved me within 2 hours... and it was a major national corporate landlord (managing a 400-unit complex which covered 60+ acres). I also paid the minimum deposit of $300 on a $2,000/month unit. So it can happen! I think that Zombie13 just completed their Chapter 13 and were able to rent in Washington (not Oregon!)

[Aspensage7]

Thank you for your detailed response (with citing sources) --- extremely helpful!!! It didn't occur to me that the appraised value is what they can accept. I assume if we make more than that it goes to the bankruptcy court?

We are in a five year plan and our payments are high, due to our professional income. They leave little room for anything - the whole crap tale of they want you to be able to take vacations and enjoy life is bullshit in my opinion. Yeah, if you don't eat for a month or two, maybe you can save up for a vacation! LOL!

Enter new phase of things .... the mortgage company returned our mortgage payment for April. I assume they are going to push us back as much as possible so they can justify taking us to court for late payments.

I am so frustrated! Three years we've been able to get by and keep telling self 24 months...you're getting there....and this pops up.

Are there any inspirational stories out there of couples who beat this beast into the ground and made it through?

I need some inspiration here. We need to see this through to the end but damn its hard.

[Barbisi]

7, I wish you much sucess in getting out from under the BK13 beast! I so understand your frustration firsthand!!!!!
We were just liberated in February after making our last payment in early January and we are shortly about to begin our new life complete with a much higher paying job and a modern rental rambler near suburban Seattle in Washington state, not Oregon, as justbroke incorrectly wrote! (Sorry jb LOL!)
We have a house that due to five years of BK13 induced neglect, we have to sell to an investor for a sizable sum. (We ran the comparison sheets and after realtor commissions, closing costs, etc. we would have barely cleared any more money and we would have had to paint the entire house, recarpet the wall-to-wall carpeted floors, put in all SS appliances, provide a new furnace, and fix many, many small plumbing issues, etc. All these repairs and updates would cost a tidy amount which would eat into our final proceeds.)
My question to you is what kind of condition is your house currently in? Do you need to spend money up front to get it market ready? Remember, some things can be paid for at the closing table others cannot.
And I do hope you're not considering moving here, where (to paraphrase a powerful 2013 Oscar-winning film) I was 12 years a Colorado indentured servant!

[justbroke]

... near suburban Seattle in Washington state, not Oregon, as justbroke incorrectly wrote! (Sorry jb LOL!)

I don't know why I make that mistake often between Washington State and Oregon. But, you caught me!

[justbroke]

Thank you for your detailed response (with citing sources) --- extremely helpful!!! It didn't occur to me that the appraised value is what they can accept. I assume if we make more than that it goes to the bankruptcy court?

From my read, and I'm not an attorney, it doesn't matter if you make anything over the value established by your schedules when you filed your Chapter 13. The appraisal value should not matter.

We are in a five year plan and our payments are high, due to our professional income. They leave little room for anything - the whole crap tale of they want you to be able to take vacations and enjoy life is bullshit in my opinion. Yeah, if you don't eat for a month or two, maybe you can save up for a vacation! LOL!

I just ended my 5-year Chapter 13 in 2019. Since we live in Central Florida (for the most part) we had access to the theme parks. I bought annual passes to Disney World, Sea World, and Bush Gardens. We did things like go to parks, to the beach (it's Florida!), and were able to do nice things with the kids (and for ourselves). The kids never noticed.

Enter new phase of things .... the mortgage company returned our mortgage payment for April. I assume they are going to push us back as much as possible so they can justify taking us to court for late payments.

You pay directly? I would just keep my paperwork straight. Mortgages are difficult to deal with especially when paid "outside the plan".

I am so frustrated! Three years we've been able to get by and keep telling self 24 months...you're getting there....and this pops up.

Yes, it takes a lot of courage and budgeting. I sold a bunch of personal property to keep us afloat when it got really bad.

Are there any inspirational stories out there of couples who beat this beast into the ground and made it through?

Yes, Barbisi 's story is below. Mine was full of life's challenges with everything from 4-new tires right after filing (with $20 in my pocket), to a sewer line collapse, to having to replace my sod (HOA), to just about everything to test you. My raining day fund was usually good, but it rained a lot!

It is hard but those that can't or refuse to budget will never make it. I think it is worth it when you get to the end. My unsecured creditors didn't get much and I was able to keep a roof over our heads, gas in the tanks, and food on the table.

[flashoflight]

Enter new phase of things .... the mortgage company returned our mortgage payment for April. I assume they are going to push us back as much as possible so they can justify taking us to court for late payments.

Your mortgage lender should not be treating you like a borrower who has defaulted on his mortgage because of the CH13. Outside of BK, the lender is very aggressive at refusing payments. You should talk to the lender's bankruptcy department.

I am so frustrated! Three years we've been able to get by and keep telling self 24 months...you're getting there....and this pops up.

Are there any inspirational stories out there of couples who beat this beast into the ground and made it through?

I need some inspiration here. We need to see this through to the end but damn its hard.

We're in the process of beating it to the ground. Most of the frustrations have been in the first few months.

I refinanced my mortgage to get a lower interest rate, get rid of the HELOC, and get rid of the mortgage arrears. One side benefit is that my new mortgage treats me like a normal non-BK customer with statements and full online access. I could never figure out how my old mortgages could add on so many junk fees. I'd always have to ask for the lender's bankruptcy department when doing anything. Now I don't have to deal with them anymore since their proof of claims are now zero. I had the option to cashout refinance to payoff the chapter 13 but I declined since my plan pays back only 1%. The portion of the trustee payment that went to the mortgage arrears now goes to the new lender so my trustee payment went down.

I learned that my trustee doesn't try to grab my meager raises or promotions, so I've been able to save up money. I suspect your trustee may not be as easy going with respect to raises because this has been key to making my 13 easier after the first year.

When the pandemic started, I took advantage of the CARES Act to move every last cent of my 401k out of my employer to an IRA so I have readily available access to extra cash during the 13. I save every month, but I contribute nothing to my 401k due to lack of access to funds.

Like JB, I have had an easy time building my rainy day fund but I've had to spend it down often for various repairs.

I don't use credit cards to carry balances anymore. I save up for the expense, put it on a rewards credit card, and then pay it off completely before the statement date. Any house repairs that can wait are delayed until I save up enough.

[Aspensage7]

7, I wish you much sucess in getting out from under the BK13 beast! I so understand your frustration firsthand!!!!!
We were just liberated in February after making our last payment in early January and we are shortly about to begin our new life complete with a much higher paying job and a modern rental rambler near suburban Seattle in Washington state, not Oregon, as justbroke incorrectly wrote! (Sorry jb LOL!)
We have a house that due to five years of BK13 induced neglect, we have to sell to an investor for a sizable sum. (We ran the comparison sheets and after realtor commissions, closing costs, etc. we would have barely cleared any more money and we would have had to paint the entire house, recarpet the wall-to-wall carpeted floors, put in all SS appliances, provide a new furnace, and fix many, many small plumbing issues, etc. All these repairs and updates would cost a tidy amount which would eat into our final proceeds.)
My question to you is what kind of condition is your house currently in? Do you need to spend money up front to get it market ready? Remember, some things can be paid for at the closing table others cannot.
And I do hope you're not considering moving here, where (to paraphrase a powerful 2013 Oscar-winning film) I was 12 years a Colorado indentured servant!

I live in Oregon - we lived in Washington before! ;-) The property needs some work but we can do ourselves (paint and cosmetic repairs). I confirmed with our attorney (and thank God we hired one when we started this process) and he said we can keep any and all proceeds from the sale, and it's not limited to what was declared at the time of filing in 2019.

I feel like things are slipping between our fingers tho, just to stay afloat.

Our payments ballooned because I added a PT job (teaching) in addition to my FT job. I don't teach during the summer and will have one less class to teach in the fall, so our income will be decreased at after June. Our atty averaged that income out over a year saying it's the same thing. Well shit it's not because we're using that to pay bills.

While we've been forced to budget I feel like we're missing something because we're still struggling. And living in the country forces us to eat at home more, not rely on getting out (which we don't do more than a couple times a month).

Very interested in hearing all of your stories and inspiration....thank you for sharing.

[Aspensage7]

Your mortgage lender should not be treating you like a borrower who has defaulted on his mortgage because of the CH13. Outside of BK, the lender is very aggressive at refusing payments. You should talk to the lender's bankruptcy department.



We're in the process of beating it to the ground. Most of the frustrations have been in the first few months.

I refinanced my mortgage to get a lower interest rate, get rid of the HELOC, and get rid of the mortgage arrears. One side benefit is that my new mortgage treats me like a normal non-BK customer with statements and full online access. I could never figure out how my old mortgages could add on so many junk fees. I'd always have to ask for the lender's bankruptcy department when doing anything. Now I don't have to deal with them anymore since their proof of claims are now zero. I had the option to cashout refinance to payoff the chapter 13 but I declined since my plan pays back only 1%. The portion of the trustee payment that went to the mortgage arrears now goes to the new lender so my trustee payment went down.

I learned that my trustee doesn't try to grab my meager raises or promotions, so I've been able to save up money. I suspect your trustee may not be as easy going with respect to raises because this has been key to making my 13 easier after the first year.

When the pandemic started, I took advantage of the CARES Act to move every last cent of my 401k out of my employer to an IRA so I have readily available access to extra cash during the 13. I save every month, but I contribute nothing to my 401k due to lack of access to funds.

Like JB, I have had an easy time building my rainy day fund but I've had to spend it down often for various repairs.

I don't use credit cards to carry balances anymore. I save up for the expense, put it on a rewards credit card, and then pay it off completely before the statement date. Any house repairs that can wait are delayed until I save up enough.

Well our payment just increased last month due to my adjunct teaching position. I was late on paying the mortgage payment by 15 days because we had almost 1700k we had to do for new brakes on our vehicle. But we paid it, and Mr Cooper sent it back. They are treating us like crap and we've been paying them all along - we got behind by a payment and 1/2 due to fires and my husband being out sick from work. The mortgage was not included in the BK.

How do you refinance during BK? Is it possible to move 401k out to IRA still? This is all new to me. How can you have a credit card?

Any other things that you think are helpful sharing please do share. We're not giving up just a bit beaten down. I keep thinking it's me - not learning the system enough - not saving enough not pinching pennies enough etc. This feels worse now, at almost 3 years, than it did when we started!

[flashoflight]

Well our payment just increased last month due to my adjunct teaching position. I was late on paying the mortgage payment by 15 days because we had almost 1700k we had to do for new brakes on our vehicle. But we paid it, and Mr Cooper sent it back. They are treating us like crap and we've been paying them all along - we got behind by a payment and 1/2 due to fires and my husband being out sick from work. The mortgage was not included in the BK.

Mr. Cooper knows about your BK and filed a proof of claim in the bankruptcy, right? You can pay direct to the lender in some districts. Remember that every mortgage payment has the same exact importance as a trustee payment even if direct pay. If you are behind on either at the end, you fail the 13 and don't get your discharge.

How do you refinance during BK? Is it possible to move 401k out to IRA still? This is all new to me. How can you have a credit card?

Any other things that you think are helpful sharing please do share. We're not giving up just a bit beaten down. I keep thinking it's me - not learning the system enough - not saving enough not pinching pennies enough etc. This feels worse now, at almost 3 years, than it did when we started!

Refinance - Look up "FHA mortgage manual underwrite" on Google and youtube. You cannot be more than 30 days late on the mortgage payment. Any lates or arrears prior to the BK filing date on any tradeline doesn't matter. Any late post-petition payments will be a big concern for the underwriter. Also look here: https://www.bkforum.com/forum/before...gage-refi-tips

401k - Not possible anymore. That ended Dec 30, 2020. You self-attest that you've been affected by COVID and they cut you a check for your 401k that can be used to move it to an IRA.

Credit card - We are allowed $1k in debt without notifying the trustee. To me, having an open credit line of $1k is not the same thing as incurring $1k in debt. You wouldn't have any real control over the growth of the credit line beyond $1k anyway. I don't tell my lawyer I've opened credit cards, but I don't leave a balance on any statement. There are some resources for rebuilding credit here. You should follow trustee guidelines. I didn't use credit cards at all the first year because I had a tight budget like you did.

Budget - Chapter 13 doesn't work well when income fluctuates downwards. On a less than 100% plan, there is no incentive to pick up a 2nd job because all of it will go to the trustee. As I mentioned before, my trustee doesn't chase after my raises which is how I got ahead. The pandemic stimulus payments also helped a lot.

The biggest win is to get rid of cable TV and limit the number of streaming subscriptions. I did a lot of manipulation such as choosing the most expensive auto insurance and health insurance possible for the court budget and change it after confirmation. We don't eat out much. I have a hybrid schedule and try to show up at the office as little as possible. I don't buy Costco tires for my old junkers. I buy new Chinese tires.

I know a number of cheap mechanics who I can do special side deals with. One of them lets me do payments during the first year of my BK. After I got ahead on the rainy day fund, I stopped doing payments but I appreciated him allowing me to pay in installments during the first year. I don't know cars, but I've never spent anywhere close to $1700 on brakes.

I've never considered getting a 2nd job or a side gig. I make enough to pay the trustee, the mortgage, all of my expenses, and save for a rainy day fund. It was hard to save anything the first year outside of the pandemic stimulus but after that it got much easier.

[Aspensage7]

7, I wish you much sucess in getting out from under the BK13 beast! I so understand your frustration firsthand!!!!!
We were just liberated in February after making our last payment in early January and we are shortly about to begin our new life complete with a much higher paying job and a modern rental rambler near suburban Seattle in Washington state, not Oregon, as justbroke incorrectly wrote! (Sorry jb LOL!)
We have a house that due to five years of BK13 induced neglect, we have to sell to an investor for a sizable sum. (We ran the comparison sheets and after realtor commissions, closing costs, etc. we would have barely cleared any more money and we would have had to paint the entire house, recarpet the wall-to-wall carpeted floors, put in all SS appliances, provide a new furnace, and fix many, many small plumbing issues, etc. All these repairs and updates would cost a tidy amount which would eat into our final proceeds.)
My question to you is what kind of condition is your house currently in? Do you need to spend money up front to get it market ready? Remember, some things can be paid for at the closing table others cannot.
And I do hope you're not considering moving here, where (to paraphrase a powerful 2013 Oscar-winning film) I was 12 years a Colorado indentured servant!

Thank you for sharing and congratulations on your success in paying off your Ch 13!!

Moving forward, may I ask what you learned? Do you think the frugal living you did during your repayments will stick? I know this will stick with us long after the Bk falls off our credit report.

[Aspensage7]

Mr. Cooper knows about your BK and filed a proof of claim in the bankruptcy, right? You can pay direct to the lender in some districts. Remember that every mortgage payment has the same exact importance as a trustee payment even if direct pay. If you are behind on either at the end, you fail the 13 and don't get your discharge.



Refinance - Look up "FHA mortgage manual underwrite" on Google and youtube. You cannot be more than 30 days late on the mortgage payment. Any lates or arrears prior to the BK filing date on any tradeline doesn't matter. Any late post-petition payments will be a big concern for the underwriter. Also look here: https://www.bkforum.com/forum/before...gage-refi-tips

401k - Not possible anymore. That ended Dec 30, 2020. You self-attest that you've been affected by COVID and they cut you a check for your 401k that can be used to move it to an IRA.

Credit card - We are allowed $1k in debt without notifying the trustee. To me, having an open credit line of $1k is not the same thing as incurring $1k in debt. You wouldn't have any real control over the growth of the credit line beyond $1k anyway. I don't tell my lawyer I've opened credit cards, but I don't leave a balance on any statement. There are some resources for rebuilding credit here. You should follow trustee guidelines. I didn't use credit cards at all the first year because I had a tight budget like you did.

Budget - Chapter 13 doesn't work well when income fluctuates downwards. On a less than 100% plan, there is no incentive to pick up a 2nd job because all of it will go to the trustee. As I mentioned before, my trustee doesn't chase after my raises which is how I got ahead. The pandemic stimulus payments also helped a lot.

The biggest win is to get rid of cable TV and limit the number of streaming subscriptions. I did a lot of manipulation such as choosing the most expensive auto insurance and health insurance possible for the court budget and change it after confirmation. We don't eat out much. I have a hybrid schedule and try to show up at the office as little as possible. I don't buy Costco tires for my old junkers. I buy new Chinese tires.

I know a number of cheap mechanics who I can do special side deals with. One of them lets me do payments during the first year of my BK. After I got ahead on the rainy day fund, I stopped doing payments but I appreciated him allowing me to pay in installments during the first year. I don't know cars, but I've never spent anywhere close to $1700 on brakes.

I've never considered getting a 2nd job or a side gig. I make enough to pay the trustee, the mortgage, all of my expenses, and save for a rainy day fund. It was hard to save anything the first year outside of the pandemic stimulus but after that it got much easier.

We actually checked our 401k, and if you are in a hardship like foreclosure, you can pull out the amount owed (with taxes removed) from retirement. While it's not ideal, it does help knowing we can fall back on that if we needed during this stressful time.

[Barbisi]

Thank you for sharing and congratulations on your success in paying off your Ch 13!!

Moving forward, may I ask what you learned? Do you think the frugal living you did during your repayments will stick? I know this will stick with us long after the Bk falls off our credit report.

Aspensage 7, thank you!
As many on these forums gleaned by my many posts about how our Bk13 became necessary ,it certainly wasn't because of high living or overspending : it was the disastrous purchase of a run down 1963 investor house that we couldn't afford to bring up to code and make comfortable for my late mother {she died in the home on April 26,2016 shortly before the last improvements were done.} with out the complete use of CCs (100 +K!) We had fabulous credit before we bought this awful shack and by the time we sold it in July 2016, we lost 26K at the closing table, we were on track headlong to BK13.
We managed to buy a better second house with stairs four months before we consulted with an attorney and immediately had to file in Feb.2017 .(He said we should have filed a year before while my mother was still alive!) Between the loss of her SS income (which she contributed to our household expenses) and the increase in mortgage of some $700 per month, there was nothing left to pay $100,000+ in CC debt which by then had tripled in interest because the intro 0% rate had ended. We just didn't have any financial reserves left. We were never late on any payments or had any arrears, however.
Fortunately, home values have skyrocketed and only because of that, will we leave Colorado with almost as much money as we could have made in an open market sale with a house we had been to fix up in the last five years.
We always lived on a budget even before we bought our first nightmare house, so I can't say this BK13 taught us how to save money on groceries or eating out, etc. I always used coupons and discount offers at restaurants and never paid full price for things like DVDs, blurays, clothes, costume jewelry, makeup but rather always sought out 75% clearance bins, online 75% sales, etc. (I know quality - I have really nice clothing and use European cosmetics and fragrances: I just don't pay full price!)
What the BK13 taught me is never buy a house you can't fix up or maintain (i.e. never buy a fixer-upper).
That's why I almost laugh when people tell me how stupid and financially dumb it is to be renting again instead of buying now in Wa. state. (Are we supposed to buy another dud at the highest price and then refile bankruptcy or end up foreclosed on just because these idiots believe one has to pay a mortgage continuously? NO!!!!!)
The sole reason we have to explain our post-BK13 status for two more years is because we bought the wrong house in the first place!
I really wish the best for you and hope you can sell your house and come out with all the money you deserve!
(For info on my many medical challenges and our myriad auto breakdowns, please read my other posts, or check out Zombie13's - I'm sure you'll find it very enlightening! )

[Carmella]

Aspensage7 My husband and I are in the home stretch with 11 months left in our 60 month BK 13. The only upside to a 100% plan is that they can't take more money if our income goes up! The downside of course is a huge payment and when I lost my second job during the pandemic (for about 16-18 months) we had less money even with my husband's overtime we were still brining home less. We are both "essential workers" so we did keep jobs the whole time.

Budgeting has not been easy and we are sharing one car. I also went through a car accident where my car with 1 yr left of payments was totaled we were able to get a car loan with fairly low interest considering our BK.

The first months/year of the BK was the hardest. If we were not paying 100% I wouldn't try to pick up more work since you can't reap the benefits personally.

My daughter graduated college literally the day before our 341 meeting and the trustee took no consideration that she was still dependent on us to an extent as she had to get an internship job that paid not enough to live on her own for about the first year after graduation. She needed the internship to get a decent full time job, kind of paying her dues. That's probably part of the reason we had such a tight budget supporting three in reality while the court looked at us as a party of two.

I don't know anything about buying a house or the other issues with your mortgage I hope they get straightened out. 24 months feels long, but you can kinda see a faint light at the end of the tunnel.

Hang in there and I wish you the best for these next 24 months