Did my trustee screw up? (and if so, do I care)

[goon]

Filed in April 2010
341 in June 2010
No Confirmation yet
I have been making monthly payments of around $2k starting May 2010

I have been watching my case on 13DataCenter.com, so here is my question/concern. I have 2 vehicles being paid in the plan, I don't have a confirmation yet, my understanding is that until confirmation the trustee should ONLY be paying adequate protection payments on the 2 vehicles (only secured debt) and nothing else (other than his % on those adequate protection payments). All other pre-confirmation monies should be added to "cash on hand" to be distributed after confirmation.

So for one of the 2 vehicle loans they have been paying adequate protection payments of about $210 a month ( seems right 1%). The other one so far has gotten a lump check for almost $5k.

I am guessing that this realistically only matters to me if my case gets thrown out pre-confirmation, or I decide to amend and give back the car pre-confirmation, or something happens that I have to convert to a 7 (which also means I would probably be giving back the car)

Did the trustee screw up here? or am I missing something? and if he did screw up here how does it affect me? I obviously don't want to rock the boat if it doesn't matter.

Thanks

[lrprn]

Once you file Ch 13, your trustee controls your financial assets. Since your car loans are in your plan, your trustee controls how much goes to your auto lenders and when. The car lenders take whatever the trustee sends them whenever it arrives.

Did you have auto loan arrears on either car in your plan as well?

You can ask your lawyer if you see something that looks out of the ordinary in your trustee's accounting for your own peace of mind. However, in the long run, as long as you are making your plan payments on time, you don't need to worry about how much your trustee is disbursing to who and when.

The lender can't do anything to you if the trustee sends more or less what you thought the lender was supposed to get. It's between your lender and the trustee. You are for all intents and purposes, out of your car loan picture until your plan is over, you convert to a 7, or for whatever reason you or the trustee dismisses your 13. Sit back and enjoy the ride.

[justbroke]

Did the trustee screw up here? or am I missing something? and if he did screw up here how does it affect me? I obviously don't want to rock the boat if it doesn't matter.

Well, how did your actual plan propose the payments to be scheduled? I would get a copy of my Plan and check it out. I proposed to pay off my motor vehicles EARLY in the plan by setting payments a certain way. Now this is just what's proposed. How the Trustee actually decides to pay the various creditors, is up to the Trustee.

As suggested by lrprn, a fellow post-Chapter 13 debtor, just sit back and relax. If you really want it explained, ask your attorney. However, s/he'll probably just tell you the same. The Trustee decides how to spread the payments and there could be various reasons as to why one was lump sum and one is not.

[goon]

Thanks for the responses

So, Post Confirmation, I know the trustee pays things as they see fit (within the rules of making sure that secured gets paid) and I have no problems with that.

I was of the understanding that per law the trustee could not pay anything prior to confirmation of the plan, other than adequate protection payments (which as I understand it was a relatively recent addition).

In my case I am really not worried as I don't see an issue with confirmation, The issue I would see is if for some reason I didn't get confirmed, in that case the trustee would have made payments (and taken his cut) that he (if I am right) legally shouldn't have made because the plan wasn't confirmed. As my case is pretty straight forward and should get confirmed I am really not worried, but saw this payment as something that (as I understood it) should not happen, so this made me curious. I guess in my mind I want to know if I am misunderstanding, but also if he is doing something wrong, that may be good information to have if something comes down to some kind of negotiations.

And to answer the questions from above, there were no arrears on the vehicle loan in question, there were arrears on the other vehicle loan (different bank), because they were being stupid and refused to accept my payments for the last couple months before I filed. The plan shows both vehicle loans receiving adequate protection payments prior to confirmation, and both vehicles being paid off first as they are the only secured debt I have.

[justbroke]

I think that you may misread the Trustee's duties a little. In my District, I have seldom seen "just" adequate protection paid by the Trustee pre-confirmation. I have only seen full payment, unless there are "significant" attorney fees and the plan payment just won't allow payment of everyone in the same month.

What controls this is 11 USC 1326 which only states that adequate protection payments must be made. However, a full payment is, itself "adequate" protection. There is nothing that says it must be exactly the amount to keep the creditor from losing equity. Additionally, adequate protection for one car may be entirely different for another, based on age and the equity in the vehicle. Yes, it's complex, but I just don't question it. I'd let a creditor bother the Trustee if they so choose to.

[goon]

What I was looking at specifically was paragraph (2) of 11 USC 1326

"(2) A payment made under paragraph (1)(A) shall be retained by the trustee until confirmation or denial of confirmation. If a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan as soon as is practicable. If a plan is not confirmed, the trustee shall return any such payments not previously paid and not yet due and owing to creditors pursuant to paragraph (3) to the debtor, after deducting any unpaid claim allowed under section 503(b)."

Adequate protection payments fall under paragraph (1)(C) and thus are not covered by the above statement, payments to leases handled through the plan would fall under (1)(B) and also would not be subject to the above, but all other plan payments would fall under (1)(A) and thus be subject to paragraph (2) unless I am missing something.

[goon]

And pre-confirmation adequate protection payments were defined as 1% of the outstanding balance monthly, both in the plan and in letters from the creditor's attorney.

[justbroke]

What I was looking at specifically was paragraph (2) of 11 USC 1326

And you're taking one part of the Code and trying to apply it to something else. If you rep-read, you'll see that it talks about a payment under (1)(A) which are payments according to the plan. However, the plan isn't confirmed and adequate protection is being made. The Code does not define adequate protection, but it is sufficient payment to protect the under-secured creditor from losing more equity.

So, what you're reading in 11 USC 1326 (a)(2) has absolutely NO impact on adequate protection payments made under 11 USC 1326 (a)(1)(C).

So, I don't understand your issue? I think that you believe that adequate protection is only "a little money". Adequate protection is undefined and can be as little as $1 to as much as the regular payment amount. I don't know why you are trying to make sense out of this.

A Trustee that pays more than adequate protection on an unconfirmed plan is protecting YOU! Think about if your plan is unconfirmed and the Trustee paid only "adequate" protection of 1% (or less than the regular payment). You'd would then be behind in payments. I'm not saying that's what the Trustee is doing, I'm saying that it does not matter WHAT your plan says.

As a matter of fact, your plan can read to pay the secured creditors over 60 months, and the Trustee decides to pay them in 24 months, because there's enough money (from your DMI) to pay them earlier. At the same point, the Trustee could decide to NOT pay unsecured creditors at all until the end of the plan (many Trustees do this) in a lump sum. Your actual plan may say otherwise.

And pre-confirmation adequate protection payments were defined as 1% of the outstanding balance monthly, both in the plan and in letters from the creditor's attorney.

There is no definition of adequate protection. It's whatever protects the creditor. The Trustee only has to pay them "minimally" what is adequate protection.