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Dealing with an Inflexible Trustee

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  • Dealing with an Inflexible Trustee

    We are only 1 year in to a 5 year plan and as of now owe about $1500 in recent (since September 2017) medical bills for MRIs, a nerve conduction study,an outpatient biopsy surgery, multiple office visits,etc.My husband is furiously looking for a new job since his current one is looking more iffy by the day (Starting in January he will be required to drive 130 miles daily to Colorado Springs because there is no non-classified work available at his current Aurora Co. work site and the management has expressed dissatisfaction with the quality of his work and have been pressuring him to look for any job, even outside companies. Therefore he has no choice but to go where ever and anywhere this company would send him until and if he can find another position at a new company! The lawyer offered no advise on how to cope with these challenges except to warn us how "concerned the Trustee is with our 'low payback amount" (less than 33%) and told us we had better "find a way"to make the monthly payment. Therefore, we are slowly chipping away at the medical bills (paying about $150-200 a month) while he prepares for this forced daily commute and continues to look for other software engineering jobs. If he is laid off, he gets three and a half months severance.
    My question is : when do we tell the lawyer and can a Trustee who is already so unhappy with the confirmed amount simply dismiss the case because of a missed payment due to an involuntary layoff?

    Thank you all!

  • #2
    Originally posted by Barbisi View Post
    The lawyer offered no advise on how to cope with these challenges except to warn us how "concerned the Trustee is with our 'low payback amount" (less than 33%) and told us we had better "find a way"to make the monthly payment.
    Just as in life, you must always find a way to pay your bills. As I always tell people here, Chapter 13 is a "pay to play" system and you simply must pay to stay in a Chapter 13. While Modification of Confirmed Plan is possible, it opens the door to "litigating" the Means Test and the schedules once again.

    Originally posted by Barbisi View Post
    Therefore, we are slowly chipping away at the medical bills (paying about $150-200 a month) while he prepares for this forced daily commute and continues to look for other software engineering jobs. If he is laid off, he gets three and a half months severance.
    These things do happen... life happens.

    Originally posted by Barbisi View Post
    My question is : when do we tell the lawyer and can a Trustee who is already so unhappy with the confirmed amount simply dismiss the case because of a missed payment due to an involuntary layoff?
    Your case can and should be dismissed if you can't pay; remember... pay-to-play? It doesn't matter if it is involuntary as you can convert to a Chapter 7 (if you are otherwise eligible for a Chapter 7 discharge).

    The Trustee really doesn't "care" about your personal confirmed amount. They are solely playing the role of a receiver (bankruptcy trustee) and trying to maximize the benefit for their client; their client is the creditors. The Trustee is never a friend but is truly an adversary. Although mine stated that "I don't make money unless you are successful" that didn't stop my Trustee from filing 2 motions to dismiss in my case (because I didn't turn in a tax return, and once for not surrendering my tax refund). The resolution of my dismissal motions was amicably resolved by simply giving a copy of the tax return to the Trustee -- so that she could do her job -- and by filing a motion to modify confirmed plan and use proceeds of tax return. I was just simply not skilled at the nuances of managing, as an attorney, the intricacies of a Chapter 13. It's not meant so that everytime you have an issue, the Trustee bends to the will of the debtor, but there are ways to do things. If I was not in Chapter 13 and had medical bills, I'd still need to pay them (by finding a way). You have to think of the payments to the Trustee as just one of those mandatory bills.

    I would try not to worry about events that may happen, but just keep my head down and worry about living my life. Life happens. If lie happens, then you can make decisions about what you want to do at that time. There are mechanisms to deal with most life issues when you're in a Chapter 13. Your attorney is correct that you should just do what you would do if you weren't in Chapter 13, but realize that those choices have consequences. Just as not paying your mortgage would result in serious issues, not paying the Chapter 13 trustee, would likewise cause serious issues. At least in a Chapter 13, there is a way -- via the modification process -- to deal with long-term and even some short-term issues.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      Thank you justbroke.
      I think the point I was trying to make is any modification downward would not be possible given the inflexibility of the Trustee no matter the circumstances. Some of the creditors are demanding more money than we can pay right now -it is not that I am refusing to" pay to play"! Remember with out any disposable income and very little wiggle room, $1500 in past due bills plus new weekly medical bills(Chiropractic care to address cervical stenosis and SI joint and pelvic misalignment until the end of the year) is very daunting to deal with.
      Has any one else gotten behind on medical bills and had trouble paying them each month ?(I am only able to pay $25-30 per creditor ) I think I will just have to call each one and disclose the BK info and just ask for more time - I am doing the best I can but I just don't have enough money to pay them all every month! I owe $460 alone to the MRI office!


      And as for the future I doubt we would ever qualify for chapter 7 ,unless we could pay back $70-80000 because of how the lawyer put it to us when I thought I would have to have the bone removed (major surgery!) and might have cancer and might have needed radiation and chemo (the surgeon was very negative and even now is warning me I could still have a stress fracture (which would be pretty serious!) so you see my medical problems may not be over - in fact I will need a new crown (around $600-700) in January as I neglected an old filling too long -I may also need a root canal since the new decay was right on top of the nerve ! My husband's HSA will provide $1100 at the beginning of the year so I am planning to get the crown and hope if I need a root canal there will be enough left to pay for that! I'm sure some of you on these forums understand a root canal can not be let go for 4+ years and it is very painful to try and live with. (I had one last November and of course I got swift care with out any drama because I had access to cash and credit and was not bankrupt yet!) We are switching the funds used for the FSA into the HSA which will give us an extra $100 a month but if we continue to have medical bills approaching $500-600 a month and he does lose his job, we will on the street! No wonder I'm worried. All I cando is try to work out (when the boe heals and try to lose weight to avoid what ever illnesses I can, protect my neck and low back from further degeneration by continuing to get regular (one or twice monthly) decompression treatments.
      If we are not able to complete this Chapter 13 because of medical issues or job loss or a combination there of, I suppose as justbroke (or one of their favorite lawyers or judges ) likes to say, Life Happens - and for us it will just be time to give up! (In French, C"est la vie and in German, So ist das Leben.)
      Lastly I hope who ever reads this will understand our Chapter 13 is not going smoothly and we may be running out of options -when should we just voluntarily opt out of a fast deteriorating situation?

      Comment


      • #4
        Originally posted by Barbisi View Post
        I think the point I was trying to make is any modification downward would not be possible given the inflexibility of the Trustee no matter the circumstances.
        The Trustee really doesn't matter; the judge matters. While it's nice to get the Trustee to concur with a modification request and not fight it, Trustees are over-ridden in their objection to a modification every single day of the week. It's about the feasibility of the plan and the circumstances. I have had things done over-the-objection of the Trustee before (as their math was just plain wrong). I could have just sat back and surrendered by allowing the Trustee -- doing their job to object to certain things -- to just have the math wrong. I was persistent. In fact, the Trustee themselves (not their staff attorney) got involved and was sure that I was wrong; I was not wrong. I take it on the fact that they handles hundreds or even thousands of cases each year and they don't know each case intimately.

        All modification requests go before the judge in a hearing. While it's okay to try to please the Trustee, you just have to present your case to the judge and override any Trustee objection. Trustees are reasonable when they see that the request is reasonable. They don't make money unless you are successful but they won't let a debtor abuse the system either.

        Originally posted by Barbisi View Post
        Some of the creditors are demanding more money than we can pay right now -it is not that I am refusing to" pay to play"
        The supermajority of Chapter 13s fail anyhow, so don't feel as though you are obligated to stay in a Chapter 13. It's not a death sentence. A Chapter 13 is entirely voluntary. A Chapter 13, though, requires stable income and very few new credit obligations; this is why Chapter 13 debtors are barred from entering into new credit agreements or creating debt without permission. The goal of the Chapter 13 Trustee is to keep you on track and to your discharge.

        Originally posted by Barbisi View Post
        Has any one else gotten behind on medical bills and had trouble paying them each month ?(I am only able to pay $25-30 per creditor ) I think I will just have to call each one and disclose the BK info and just ask for more time - I am doing the best I can but I just don't have enough money to pay them all every month! I owe $460 alone to the MRI office![/I]
        An issue with filing Chapter 13 is if you have ongoing medical problems and can't include it in the Chapter 13. Simply put, you can't include "future" unknown costs in the calculations. If a major event happens and you lose a bunch of income, you can convert. Conversion to Chapter 7 could cause you to lose property. But that's no different than if you were not under bankruptcy protection and had escalating debt.

        Originally posted by Barbisi View Post
        Lastly I hope who ever reads this will understand our Chapter 13 is not going smoothly and we may be running out of options -when should we just voluntarily opt out of a fast deteriorating situation?
        It happens just as life happens. A Chapter 13 is not good for instability in income and/or escalating debt caused by medical conditions. There is no chapter of bankruptcy that can deal with those two compounding issues.

        The only saving grace of a Chapter 13 is that if you lost income to qualify for Chapter 7, you could convert and include all the new debt as if it existed at the time the Chapter 13 was filed. However, pulling the Chapter 7 trigger means that you won't have that option again for 8 years (from filing the converted Chapter 13). Bankruptcy is not the answer for everyone. Many people use it just to keep creditors at bay for a short period of time as they personally "reorganize" their lives or realize that they just can't afford their escalating debt or property. This is predominantly why more than 70% of Chapter 13s fail.

        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #5
          Thank you justbroke.
          One of the biggest problems we are facing is the very high cost of living in Colorado -rent is the same as a mortgage . That is the whole reason for this BK in the first place -we thought buying an investor home we could not afford to fix up with out credit cards was a better option than continuing to pay rent! $100000+ of new debt later we know better! Even if we surrender our house in a chapter 7 , where could we afford to move? And if he can not find another job , what then? I feel doomed.

          Comment


          • #6
            If you want a comparison of what the IRS / United States Trustee thinks of what is reasonable rent in your county in Colorado, check the USTP Allowances for your family size. It's often quite shocking since they use the IRS Financial Collection Standards (FCS) which are based on the HUD standards. For example, rent for 2 people in Arapahoe County Colorado (including Denver) is $1,380 a month... which isn't that bad. Rent for 2 people in Boulder County is $1,609 (and I though that would be the highest, and it is not). If you're making $90K a year, that's not bad (as even at $2,000/month, that's only 26% for housing). They say -- I don't know who "they" are -- that your housing to income ratio should be 28% of less; Arapahoe County would be 18.5%.

            I personally know that the unknown is scary. Losing a job these days is a real probability. Compound that with health issues and we just don't know how we would live. But we go on. We marshal through. We can't become paralyzed worrying about what life may bring us next. Life happens. Adjust.

            (In the long term, purchasing is almost always better than rent if a.) the housing appreciates, b.) you take no new loans against the property, c.) you incur very little new debt, and d.) you eventually pay off the asset and it's worth more than you paid. But, in some circumstances, purchasing may not be the best option.)

            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Thank you justbroke.
              I think finding a small apartment in Colorado for $1380 would necessitate a move to a scary part of Aurora. Everyone I know renting is paying about $2000 for much less square footage( 1000sf vs. 2800sf), plus we would have to sell 70% of our furniture and posessions and get rid of our 4 cats.

              Comment


              • #8
                Barbisi, I don't list the prices to scare you. I list the prices because those are the "allowed" limits for that county (Arapahoe). Chapter 13, when you own a home, allows you to stay in the home despite what you're paying. If you did not own a home, they would use the IRS FCS value ($1,380) as the maximum cost. The cost doesn't take into consideration neighborhood type, crime, or any other amenities; it only considers the mean cost for a residence that the IRS deems modest/reasonable.

                I listed the value just so that you could see that what we think is reasonable versus what the collection standards dictate. For me, I believe that $2,000/month is reasonable for what "I" want to live in Florida but it's actually $1,110 in the IRS FCS for a 2-bedroom in not so desirable parts. That's simply the reality. (I'm lucky because I own my home and my mortgage was over $5,000/month in my Chapter 13 and that was acceptable.)
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog


                I am not an attorney. Any advice provided is not legal advice.

                Comment


                • #9
                  Wow, thank you again justbroke.
                  I'm glad you explained that to me. I recall a puzzling thing the lawyer told us when we first met him: he said we had "wasted" money by buying a house with "such a high mortgage" and we should have rented instead - he claimed we could have saved most of the $80,000 check we received at closing instead of putting $58,000 towards the cc in order to qualify for a new mortgage. If we had rented a dive the trustee could have raised our payment by $800 each month! (That comes to roughly $9,600 per year, $48,000 extra for the creditors! ) Add that $48,000 to $35,000 =$83,000, much closer to an acceptable 90% payout
                  I've said all along I wish we could get our hands on a windfall of $100000 to get free of this whole process ,but since the total exceeds our current income, we are effectively trapped.

                  Comment


                  • #10
                    Now I understand how these payments are calculated -that is why the lawyer has said repeatedly that many are paying far more and earning a lot less. If you rent, your payment is much higher because of the limits imposed by the IRS standards. Yet another sobering reality of what a BK13 actually means in terms of lifestyle - think of rent control ,not for the benefit of a low income wage earner but billionaire credit card companies! That's one way to ensure that the debtor pays back most if not all of what he owes! And that also explains why rent prices are never discussed on these forums. Well,I only wish we had filed with more knowledge and waited a bit longer to file a better petition, one that might have allowed us some real wiggle room.

                    Comment

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