Hi everyone.
So I had a text from our attorney this AM; he said, 'can you call me please'. Initially I thought, oh no now what? LOL
I called him back, and these are the points we discussed / he said (his statements in the conversation, not mine):
1) Make sure the mortgage is paid by the first of the month, even if paying between the 1st and 15th is considered 'on time', to avoid a mess at the end.
2) RE: borrowing from the 401K before or after the discharge, and closing: we can do whatever we want; we can borrow from it now. Again, just make sure the mortgage is paid by the first of the month. In the case of a 401k loan, we are the creditors, so to speak - we pay ourselves back, plus interest, out of our weekly paycheck. For a credit card or other loan, the creditor would have to talk with the trustee.
3) at this point, we could pay off the plan early; the trustee wouldn't care. In fact, the trustee and all creditors would be happy if that happened. Note: we aren't going to do that, for reasons explained below.
Reasons on #3:
we have always paid the mortgage between the 1st and 15th. We could 'reverse' our budget, so we pay the mortage twice in one month, but then we will have to delay the other bills.
The 401K loan: I know this is an unpopular choice because, 'life happens'. Also, once we do this, we will be at the 'point of no return'. We understand and accept the risks. We're ready for positive changes in our life. The loan would be used to pay the mortgage before the 1st of the month (i.e. get ahead/catch up), for the next few months; ie for the remainder of our plan. Again, our attorney said, this is acceptable. This is also why, we will not pay off the plan early. If we paid off the plan say, today, then the trustee would mail a letter to our mortgagor asking, 'are these people current'? And the mortgagor could say, No. Now, on the 'good side': if we do the loan now, we could repair house stuff starting now, get the closing, list the house, and get outta Dodge.
401k part 2: we can do only one loan at a time, and there are IRS rules about the max we could borrow: ie the lesser of: 50K, or 50% of the current 401k value, or 50% of the 401K value, MINUS any other outstanding 401k loans. So there's a cap. Even if we had $800,000 in our 401K, the max we could borrow is 50K.
401k loan #3: when we sell the house, we pay off the loan. The loan is an expense of selling the house, period. If possible we will list them as a payee at closing. So, the alternative to the loan is, 'stay in the house! fix up for years on end'. No. No. No. We're done. This is not an option for us. We're gone. Done. Finito. Buh Bye.
payoff the plan early: from reading these forums the past 4 years, 9 months, 1 week, 2 days, 3 hours, 18 minutes, and 34.613 seconds (nooo not really), I do not recall reading about anyone paying off a partial plan 2 months early. Now, we can do as shipo suggested, which is make the last payment on day 1 or 2 of the final payment cycle, to accelerate the discharge.
payoff the plan early #2: we have read here, someone accidentally made a double payment in one month, and that extra payment was 'pocketed'. At this point, we will be paying $8 over our owed amount, per the document (forget what it is called). I have added up all our previous payments, plus the final payments, and we overpay by that eight bucks. Woooo Aaaaahhh.... Starbucks, here we come! Not. Sure we'd love to pay off early but the reasons above explain why we will hold off.
Also: when the attorney put in the work on the plan modification a year or so ago, he was compensated by the legal insurance company provided by my former employer; albeit, at 25% of the suggested rate. That sucks, but at the same time, we do not owe him any additional fees.
EDIT: Before we do *anything*, I will email our attorney, with a recap of our phone chat, to ensure I understood with absolute clarity each point we discussed.
Ok; I think that is all I have. What are your thoughts on this? Thanks.
So I had a text from our attorney this AM; he said, 'can you call me please'. Initially I thought, oh no now what? LOL
I called him back, and these are the points we discussed / he said (his statements in the conversation, not mine):
1) Make sure the mortgage is paid by the first of the month, even if paying between the 1st and 15th is considered 'on time', to avoid a mess at the end.
2) RE: borrowing from the 401K before or after the discharge, and closing: we can do whatever we want; we can borrow from it now. Again, just make sure the mortgage is paid by the first of the month. In the case of a 401k loan, we are the creditors, so to speak - we pay ourselves back, plus interest, out of our weekly paycheck. For a credit card or other loan, the creditor would have to talk with the trustee.
3) at this point, we could pay off the plan early; the trustee wouldn't care. In fact, the trustee and all creditors would be happy if that happened. Note: we aren't going to do that, for reasons explained below.
Reasons on #3:
we have always paid the mortgage between the 1st and 15th. We could 'reverse' our budget, so we pay the mortage twice in one month, but then we will have to delay the other bills.
The 401K loan: I know this is an unpopular choice because, 'life happens'. Also, once we do this, we will be at the 'point of no return'. We understand and accept the risks. We're ready for positive changes in our life. The loan would be used to pay the mortgage before the 1st of the month (i.e. get ahead/catch up), for the next few months; ie for the remainder of our plan. Again, our attorney said, this is acceptable. This is also why, we will not pay off the plan early. If we paid off the plan say, today, then the trustee would mail a letter to our mortgagor asking, 'are these people current'? And the mortgagor could say, No. Now, on the 'good side': if we do the loan now, we could repair house stuff starting now, get the closing, list the house, and get outta Dodge.
401k part 2: we can do only one loan at a time, and there are IRS rules about the max we could borrow: ie the lesser of: 50K, or 50% of the current 401k value, or 50% of the 401K value, MINUS any other outstanding 401k loans. So there's a cap. Even if we had $800,000 in our 401K, the max we could borrow is 50K.
401k loan #3: when we sell the house, we pay off the loan. The loan is an expense of selling the house, period. If possible we will list them as a payee at closing. So, the alternative to the loan is, 'stay in the house! fix up for years on end'. No. No. No. We're done. This is not an option for us. We're gone. Done. Finito. Buh Bye.
payoff the plan early: from reading these forums the past 4 years, 9 months, 1 week, 2 days, 3 hours, 18 minutes, and 34.613 seconds (nooo not really), I do not recall reading about anyone paying off a partial plan 2 months early. Now, we can do as shipo suggested, which is make the last payment on day 1 or 2 of the final payment cycle, to accelerate the discharge.
payoff the plan early #2: we have read here, someone accidentally made a double payment in one month, and that extra payment was 'pocketed'. At this point, we will be paying $8 over our owed amount, per the document (forget what it is called). I have added up all our previous payments, plus the final payments, and we overpay by that eight bucks. Woooo Aaaaahhh.... Starbucks, here we come! Not. Sure we'd love to pay off early but the reasons above explain why we will hold off.
Also: when the attorney put in the work on the plan modification a year or so ago, he was compensated by the legal insurance company provided by my former employer; albeit, at 25% of the suggested rate. That sucks, but at the same time, we do not owe him any additional fees.
EDIT: Before we do *anything*, I will email our attorney, with a recap of our phone chat, to ensure I understood with absolute clarity each point we discussed.
Ok; I think that is all I have. What are your thoughts on this? Thanks.
Bankruptcy Wizard
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