Auto Loan - What to put on the Schedule J and B22A when a 13 had been filed b4?

[gman]

I have a few questions. Hope you all can help. :-)

Scenario:

• Debtor has already filed a Chap 13
• Trustee did NOT yet approve the plan
• Preliminary (not confirmed) 13 plan called for a car payment cramdown from $632 to $300
• Debtor is going to withdraw the 13 and file a 7

Questions:

• On the Schedule J - should the Debtor list the loan payment as $632, $300 or something else?
• Same question on the Schedule B22A
• What should be done about the cure amount that will likely arise when the auto loan company sees the 13 be withdrawn? Where is that placed (which forms) and what is the calculation?
• If the car loan rate CHANGES after the 13 is withdrawn to a higher rate, how is that (and the new higher payment) handled in the J and the B22A?
• The Debtor is likely to reconfirm the loan in the 7 - the car is about break even - maybe a little upside down.
• Is there anything else that the Debtor should concern themselves with?

Thanks for any and all advice!

[justbroke]

On the Schedule J - should the Debtor list the loan payment as $632, $300 or something else?

The loan payment is what is the debtor is legally obligated to pay. That amount is $632. Please realize, that upon dismissal (or conversion) of a Chapter 13, the Plan of Reorganization (Plan), is no longer enforceable and has no power. The players go back to where they were before filing. In other words, the dismissal or conversion, invalidates the plan.

Same question on the Schedule B22A

Same answer as above.

]What should be done about the cure amount that will likely arise when the auto loan company sees the 13 be withdrawn? Where is that placed (which forms) and what is the calculation?

I talked about this on the other thread. You can't "cure" the amount in a Chapter 7, but the Chapter 7 Means Test (Form B22A) does perform calculations similar to a Chapter 13 (Form B22C) as if you were going to cure the amount. However, this will not "cure" the underlying issue in that the debtor will owe arrears on the vehicle upon conversion. This can be corrected by entering into an arrangement in a reaffirmation with the creditor OR to redeem the vehicle. (Redemption was my choice in my conversion. I later refinanced the redeemed vehicle at a rate 10% lower than the redemption rate, some six months later. Be aware that redemption rates are very high.) Edited to add: I used USBank's 722 Redemption to fund my redemption. I also want to note that you may be able to enter into an agreement with the lender, without reaffirming, to cure the arrears through an installment agreement, but I have never ever read about these with an automobile lender. The thing in a conversion with arrears, is to be certain of what your prospects are and prepare for the worst! (In my case, that meant redemption funding being approved upon conversion... and ready to go!)

If the car loan rate CHANGES after the 13 is withdrawn to a higher rate, how is that (and the new higher payment) handled in the J and the B22A?

It can't "change" to a higher rate. The rate you put on Official Form B22A (the Means Test for Chapter 7) and Schedule J is the "contractually" amount due. You would refer to the Installment Agreement and that's what goes on those forms!

The Debtor is likely to reconfirm the loan in the 7 - the car is about break even - maybe a little upside down.

You mean reaffirm. Again, the debtor may want to consider redemption if the lender will not help the debtor "cure" or otherwise re-amortize the loan and bring it current upon discharge through a reaffirmation. At best, these are extremely difficult if you are pro se. Trust me, I even worked on a redemption and it was very difficult working with Ascension, the firm that typically handles vehicle loans in Chapter 7/13s. They actually, first, objected to redemption, then changed their mind after they actually read my motion to redeem. In fact, they lowered the amount of the redemption after they read my well reasoned opinion, in the motion, on valuation and WHEN valuation was to occur. (In the 11th Circuit, valuation is as of the date of the HEARING on the motion to redeem. Not the date of filing. My date of filing was in 2008, but this was a conversion, so my hearing date was in 2010 as part of my conversion... some 2 years later.)

This debtor should be very concerned if they can't afford an attorney, and they are relying on fourth hand information. I say that so that either the debtor reads up on this themselves and get acquainted, or hire an attorney. The problem is that the car is a problem for an unskilled layman. Trust me, I have been there and I chose redemption because the lender was difficult to deal with for a reaffirmation with a re-amortization. (I needed the re-amortize because I was almost 2 years in a Chapter 13 with a "crammed down" payment! Thus, I was in arrears, even though i was not in arrears upon filing!)

As suggested in the other thread, I highly suggest that this person join BKForum and ask some questions on their own. I also highly suggest that you should highly suggest that they learn this by research and even asking questions here on BKForum (or a similar forum). They may even want to consult a few attorneys during a free consultation.

[AngelinaCat]

Hi gman. I am a CH7 Asset case, so I don't know what real help I can give regarding a CH13. If I were your friend, I would put the amount of the original monthly payment in the appropriate spots in the schedules. As far as any differences in payments made to a CH13 trustee, and whatever happens when she converts, JustBroke is probably the most qualified to answer that.

You surely are aware that the general recommendation from members of this forum regarding mortgages and car loans, is to NOT reaffirm them. Just stay current and pay as you always did.

There are case where one might want to reaffirm. In our case, we had about 10-14 months left on our car loan, and we wished to remain with our credit union. 'Hub had been a member for nearly 40 years. So we reaffirmed. For us, it was not a problem.

[AngelinaCat]

JB got in ahead of me, so there is one of our best recommendations.