Our chapter 13 journey has started

[notreallyme]

Heard back from our attorney. Basically it us on us, not him, to reach out to our bank. Flashoflight was pretty much on target. We can't ask the trustee to increase the heloc payment - the request has to come from the bank. Side note, our primary mortgage company is pretty good about this - they do an escrow analysis twice a year and also make as needed adjustments. For example when our insurance increased, they asked for a small increase in the monthly payment. Then in June when our county raised our assessed value ==> property taxes increased, they requested another small increase.

So from our attorney:

1. Talk with our bank and ask them to increase the payment
   1. Based on their past rate of response it will take them months to ask for the increase
   2. Until they do, monitor our payments - our due date is the 10th, so look at the statement for the total due and then subtract the trustee payment and make sure we submit this before the 10th - either on-line or walk into the bank to make sure no arrears ever develop. (There is no arrears right now as they have been taking what is on the statement due amount using the Trustee HELOC payment plus grabbing some from the car).
2. On the car versus HELOC accounting
   1. We can ask them to fix their accounting using the trustee ledger numbers
      1. This would cause an arrears on the HELOC of 800 which we would need to pay off ASAP
      2. Car would then be paid off
   2. Leave this alone and make monthly payments
      1. Scheduled payment is 85 month - so pay at least this - more if we want the car paid off sooner
      2. HELOC will be OK based on their accounting
      3. TIll rate is 5.5%, so a little interest each month, but roughly 10 payments of $85 should pay off the $800 balance.

Our state is a little ambiguous on car titles. In some cases, you get the title as soon as the balance is $0. Other lenders interpret it as you get the title at discharge. Only reason to pay off early would be to attempt to get the title back if we were going to trade-in the car. However, since it is paid off and in very good shape after the repairs in the spring, we can drive it for quite a while with only normal maintenance expenses. ( a 2017 model year with 88,000 miles).

We can swing the extra payments - it will just back up even further rebuilding our emergency fund and make for less presents at Christmas. All of our kids are grown and either out of the house or in college, so they understand our situation and are fine with smaller Christmas celebrations for the next couple of years.

[notreallyme]

Thanks for your comments. That is what we are worried about is a new arrears developing that would end the stay or cause problems with the discharge. Luckily there are no arrears yet based on the banks accounting (per the monthly statements). I asked my attorney if we should contact the trustee on the banks behalf or contact the bank to increase the monthly payment the trustee sends out. For eight months the payment the trustee sent was over 100 too high. Then for about three months it was close to correct as interest rates went up. Then for five months they have been misapplying the car payment to the heloc. So on their end it shows us exceeding the monthly minimum payments.

Once the trustee stops making car payments, current plan is to make manual payments of 100 each month on top of the trustee payment until the correct payment amount is communicated to the trustee. Will also keep an eye on interest rates incase the feds raise it again. Definitely don't want a new arrears developing. Also want to find out if I should send in monthly payments on the car. The monthly payment in the plan was only 85 but the trustee was sending in about 150 a month. Then once the first mortgage arrears and fees were paid off they started sending 450 a month which is why the trustee shows the balance of 0. In April is when they bank started applying part of the car payment to the heloc. Luckily was not behind on the heloc when we filed, so there was no original arrears.


Figure depending on how the bank wants to handle it I need to send them 750 - they can either use it to finish paying off the car or go back and properly apply the payments then use the 750 to pay off the new arrears that proper accounting would have created. Biggest issue is going forward. I would like the trustee to make the correct payment. However the banks attorney and accounting department aren't real bright. We tried to get the correct payment at the beginning but they couldn't figure out simple math. Finally our lawyer and us agreed to just leave the payment too high. The rest of our trustee payments would still pay everyone off in less than 60 months. And we knew interest rates would go up, but in the meantime the higher payments would lower our balance - which they did when I look at the statements.

Basically just want our lawyer and trustee to get all payments correct now so there aren't any issues in three or four years when it is time for our discharge. Don't even mind paying a little extra if we have to - that would just have our plan end even earlier. Heard too many stories of people getting to the end and either owing a lot or getting a dismissal rather than a discharge. I would rather over pay and either end early or get a refund.

Unfortunately shot my credit score to **** before we filed. Otherwise I would have done a cash out last year and paid everything off rather than file but couldn't find a lender who would touch us. When we filed we had about 35% equity in the house. Due to inflation the house is worth much more now, but don't think anyone would lend to us and the house is above the regional cap for fha if we combined the first mortgage and the heloc.

This all my fault for not reconciling the payments the last few months. Everything looked good for a year so I got lazy. Also trying to find out how to talk with the lender on the other car. As soon as we filed they transferred the account to their bankruptcy department and took away access to statements and online account, so i don't know if they balance to the trustee either. Might have to have our lawyer tell with them since they don't want to talk with us. Have been trying to avoid contacting our lawyer too much as I don't know what was included in our flat fee besides the initial filing, plan development and 341 hearing.

Sorry for the rambling post. I appreciate all of the advice I her on this forum.

[flashoflight]

That HELOC is going to burn you and it needs to be dealt with in the next few months in case the bank wants relief from stay. You need to calculate the payment yourself according to the terms of the note for calculating the adjustable interest and pay the much higher monthly payment amount to the bank. So I would have calculated what the trustee would pay to the HELOC and you make up the difference every month. Yes I know the new payment is probably much bigger and probably unaffordable. Now you have new HELOC arrears and need to catch those up too. I think you need a plan mod to refinance the 1st and 2nd to a new 30 year FHA manual underwrite mortgage to rid yourself of the arrears. Even though the interest today is much higher than the original 1st mortgage, you cannot lose the discharge by having mortgage arrears at the end due to not paying enough to the HELOC. I think if you're going this route, you should pay off your bankruptcy with the refi since you have to go 100% anyway. If you don't pay off the bankruptcy with the refi, get a limited cashout refi to pay off the HELOC completely and the car arrears. Then direct escrow to pay any refunds to the car loan rather than you.

[notreallyme]

So, my August 31 update. As expected according to the trustee NDC site, all secured claims are paid (more on this below). Part of the 8/31 trustee disbursement has started going to unsecured. I thought they paid all creditors at the same time (same percentage to each). However, they only sent payments to about a third of unsecured. I am guessing that is because they didn't want to split it further and issue a lot of $10 or less checks.

No the concerning part. For the first 11 months, I tracked trustee payments to what the creditors were recording (for those where I could still see the accounts). Everything was matching to the penny, so I got lazy and stopped checking. Big mistake on my part, I would recommend that, if you can, reconcile the trustee ledger to what your accounts say was recorded. I stopped checking and two semi-big items have occurred.

First, my primary mortgage was sold off when the company went out of business. During this, $5,500 disappeared - basically the arrears amount. Trustee shows arrears paid, new company says still owed. Once this entered bankruptcy, I wasn't able to track the original mortgage holder. Luckily I can track on the new mortgage. I know that the trustee does an audit before discharge, so they will catch this when they ask for confirmation from the mortgage holder that everything is current.

Other issue, one of our car loans and our HELOC are through the same bank. The HELOC is on an adjustable rate. Since interest rates have gone up, the payment should have gone up. When payments first started, the bank submitted a monthly payment that was $100 to high, but lawyer said nt worth fighting about since interest rates were rising. However, now 14 months later, interest rates are much higher and the bank never asked for an increase, so the payment is too low. Instead of asking for an increase, they have been applying part of what the trustee has been sending for the car to the HELOC. So, trustee says car is paid off, bank says we still owe almost $800. Also, they "lost" $100 - I add up their recorded payments for both accounts versus what the trustee has actually paid and $100 disappeared in May.

I have sent an email to our lawyer explaining this, including a spread sheet that shows for every month what the trustee sent in and how the bank applied this to the accounts. If we have to send a payment to the bank to pay off the car, we will start saving up for this. Bigger concern is if the bank doesn't raise the HELOC payment, we will be getting further behind every month.

Overall, about a year in and things are going as expected. If you can, follow the advice of the senior members here and try to set up an emergency fund. We were doing OK, then our furnace broke in December and then my wife's car needed major repairs in March. Our monthly payment is pretty steep compared to our income. However, we thought we would gain some breathing room this year as salary would increase but payments wouldn't. Then, my company had a bad year so annual profit share was 50% of prior years and my wife's hours go cut. Still able to keep up with bankruptcy payment and bills, but can't put a lot into replenishing the emergency fund. On the plus side, based on the trustee ledger balance on our unsecured claims (which match my records) and the amount they will be paying monthly, the unsecured should be paid off in 30 more months, so the whole process will be around 44 payments rather than 60. (100% plan, but a lot of creditors didn't submit claims, so our initial plan payments are higher than what would be needed to pay 100% of submitted claims in 60 months)

[Carmella]

notreallyme sounds like you have it all under control and moving right along!

[notreallyme]

11 months in and things are going as planned. Mortgage arrears and gap is all caught up. Last few payment have been 100% on cars. Looks like trustee will totally pay off cars before going to unsecured (cars and small tax item only secured or priority claims). Cars should be totally paid off according to trustee on the 8/31 payment. Lender's websites show different amount, but not far off - only off by $50 on one car after 11 payments and less than $100 on the other car.

Mortgage statement looks messed up - our original lender went out of business and sold off our loan. New lender put the first 4 payments in "suspense" so over 10,000 is just setting out there in limbo, but at least they recorded them. Next couple of payments they actually applied the payments to our balance and escrow accounts. I am a spread sheet monkey so I am calculating how much interest should be accruing versus what they are accruing by ignoring four payments. If it becomes an issue at the end of our plan, I will have documentation to fight them. I download the ledger and claims summary every month from NDC and also download our mortgage and car statements so that I can reconcile payments.

Might not update again until all of secured is paid off in August.

[notreallyme]

December was slow so not much to report. New year started with a bang - furnace went out the first week of January. Luckily the house has two and we put in some space heaters. No-one will finance us (surprise surprise with the credit score hit from financing) so on top of payments, we are socking a little away each check since one of the items that died is the blower which is needed for the AC as well.

Then got a letter our mortgage company was closing their doors - they are under federal investigation and have some large fines for incorrectly managing reverse mortgages. Was a privately held company, so they decided it was just easier to sell off all their loans and close down. Unfortunately, they did not tell our trustee the mortgage was transferred. Asked our lawyer as soon as we received the letter mid-January (they gave the minimum legal notice of 15 days), but he said it should be fine - it is up to the mortgage company to tell the trustee. Waiting to see how bad the accounting goes - Trustee made the payment on 1/31 to the old company, which should be OK - transfer letter said payments after 2/1 are due to the new company. We'll see how that goes.

Extra disbursements in January - we pay every two weeks, but trustee is slow with recording payments. They actually received three payments in September, but they record them 4-17 days after they are withheld from our paycheck, so it took until now for the "extra" payment to be recorded.

Seeing some progress - all mortgage gap and arrears are caught up. (except for a small balance where the trustee appears to have forgotten to send out the check - balance is $89.81 and our case summary shows $89.81 on hand in our account). Now only secured remaining is a small state tax bill and the two on-going cars. Be interesting to see if now the trustee makes payments to unsecured or if they just pay off the cars quicker. Hoping they pay of the cars quicker since we pay interest (5.5% till rate) on those.

If you can, follow the advice people gave me of trying to set a little aside for emergencies. We were, but wife's car needs tires and brakes (luckily just pads, hasn't gotten down to the rotors) which we are prepared for but then the furnace issue hit.

Still ahead of the game from filing - wish I had done it quicker. We are in 100% plan, but just having interest frozen on unsecured is a big help. Each month when I download the trustee summary it is exciting to see secured balances decreasing (now pretty much at zero) while unsecured isn't growing. Soon will see unsecured going down. 8-9 months in - Filed in May but first payment to trustee in June. Hoping things get a little better each year as my wife and I get our annual increases. Also holding out hope for minor profit share bonus this year.

Listen to the experienced people here - they've been through it all and know what they are talking about.

[Carmella]

It sounds like all is going well. Once the BK 13 is in process it's just waiting it out and juggling life on the income you have left!

[notreallyme]

Just realized I haven't updated in a while. Nothing major has changed. Mortgage company is being a pain. They put payments from the trustee in suspense for a month and then apply them. They are applying in increments of full payment only - rest stays in suspense. That is expected. Trustee is making three payments a month - one to arrears (two payments from before filing), one to fees the mortgage company added on for bankruptcy and one for on-going monthly payments from the time of filing. Mortgage company is applying all to the payments since filing. When they apply this months trustee payment should be caught up on current payments, so will see how they start paying down arrears and fees. If they didn't place payments in suspense for a month, would be caught up now. By them suspending payments, they are able to say each one is late and charge me a late fee each month.

Still cheaper than the interest I was paying on unsecured, so I am ahead of the game.

[notreallyme]

Monthly update. It has been a month since confirmation, and trustee is now paying creditors like I expected.

Legal was included in bankruptcy - paid in full. Monthly 1st & 2nd Mortgages - monthly on-going now up to date, arrears, "gap" & fee 50% paid, secured (cars) up to date. Apparently while the trustee was sitting on my money and not making on-going mortgage, they were adding payments for June & July to "gap" with a 5% "late fee" surcharge. So I was getting charged for the trustee not making payments. I can kind of understand - they didn't want to distribute money until plan was confirmed. Filed in May, so now owed six payments (May, June, July, August, September and October - since due on 10/01/22). They put May into arrears since 5/1 was before my filing date of 5/17; , June & July into GAP; and Aug-Oct as on-going. Paid three months of secured - had made payments in June-August, so basically paid May, Sep. and Aug. No payment on small state taxes that I thought fell in the same category as secured.

Only interesting thing is trustee objected to three claims. Claims are really strange - I had accounts with these three that were charged off between 2005 & 2010. Funny thing is I also had three current accounts with them with basically the same amount as the prior accounts. So, when they filed proof of claim, they matched close to what I expected and what our attorney pulled from credit reports, so I didn't pull their submission from Pacer. Pulled those this week - they filed the old claims and not the new ones. So looks like another $4,000 is being objected to and will probably get disallowed. Trustee's argument was these were well beyond statute of limitations, so are uncollectible. Most of my monthly payment is 1rst and 2nd mortgage and secured. About 2,000 goes to unsecured - so if these objections stand, that will shorten plan by two more months. So looking at less than 4 years (I am in a 100% plan, so it is possible for early payoff).

[notreallyme]

Nothing really to report this week. Thought trustee would finally start making payments as our plan was confirmed last week. We started paying in back in May. Trustee made payments 6/30, 7/31 and 8/31. However, they are only paying the secured car loans. I thought on-going mortgage was top priority for payments, but I guess not. Trustee is setting on 17,000 after his fees and car payments, but nothing has gone to our lawyer (fee included in plan), mortgage or taxes. Probably going to slow down on reporting - maybe a report after 9/30 to see what payments are made and then when we hit major milestones - mortgage caught up, cars paid off, etc.

[flashoflight]

Our HELOC claim has too large of a monthly payment - the bank's lawyer screwed up, but since he is a chapter 7 trustee that our lawyer works with a lot, we chose not to argue. The HELOC is adjustable rate, so a few more interest rate increases and the payment will be about right. In the meantime, any extra we pay will just reduce the balance. Since there is a balloon payment in six years, this will actually help us out.

My HELOC payment was too large as well because I used the last statement, which was almost a year old due to being behind. The bank took my number in the proof of claim as-is LOL. Rates were going down when I filed so the payment should have been lower. The real minimum dropped a lot after filing due to COVID. Because I have a 1% plan, I had no incentive to correct the HELOC payment. I used the larger HELOC payment to justify a bigger mortgage payment on the refinance to give the unsecured creditors as little as possible once again. As I learned long after filing, the lender knew what was the real minimum interest only payment and used that number rather than the proof of claim number. That meant the excess was used to pay down the arrears.

Even back in 2020, I was terrified that my 4.25% HELOC rate was going back to the 6s and above sooner rather than later and even worse I would also face fully amortizing payments in 2023 so I refinanced out of there. I'm so glad I have a fixed rate in the 2s. I wish you the best of luck in this current interest rate environment.

[notreallyme]

A lot happened in the last two weeks, but nothing that was shocking. After this, things should be pretty smooth - will be on a tight budget but will know what to expect.

Two weeks ago (8/8/22) our lawyer objected to the incorrect proof of claim. We provided him evidence that the loan had been paid off in February. Creditor had until 8/22/22 to respond and did not. However, today (8/24) they filed to withdraw their claim.

No one objected, so plan was confirmed on on 8/23/2022. Was able to download the order today. Only interesting thing is it mentions reporting annual bonus and tax refunds. However, our bonus and last tax refund were included in the six months of income used to determine our disposable income, so our payment was already more than sufficient to pay off less than 60 months. Around 80% of what we expected on unsecured actually filed. This, with the fact that our filed plan double counted some debts means we should pay all of the creditors at 100% closer to 48 months than to the plan of 60 months. Total approved unsecured is 70% of our original submission when we filed. Will adjust our withholdings so that there is very little refund next year.

Now just waiting to see what the trustee pays at the end of the month. For June and July he just paid our secured car loans, so mortgage and HELOC kept falling farther behind. If I read things correctly, the order of payment should be on-going mortgage than priority tax then secured and unsecured last.

Our HELOC claim has too large of a monthly payment - the bank's lawyer screwed up, but since he is a chapter 7 trustee that our lawyer works with a lot, we chose not to argue. The HELOC is adjustable rate, so a few more interest rate increases and the payment will be about right. In the meantime, any extra we pay will just reduce the balance. Since there is a balloon payment in six years, this will actually help us out.

Wish I would have filed a long time ago. Of course, wish even more that I hadn't made bad decisions and got into this position.

[Carmella]

notreallyme you are so organized. I was not. You are right about this forum I wish I found it before we filed!

I have no idea if all the claims were correct. I didn't know which collection agency went with which credit card. You will shutter when you read this. I shredded most of the stuff. I only had the most recent information when we filed and like I said I didn't know which agency bought off which credit card!

I had a feeling ours was going to end early that not everyone filed, but I had no organization to figure it out. I thought it would end maybe two months early not almost a year early so I was pleasantly surprised!

[notreallyme]

I am glad I found this forum. I have been following the advice of the senior members and it really helps out. I am refreshing my rss feed daily and looking for anything on my case. Much cheaper to only look at PACER for specific documents. Going to keep it below the $30 per month. This month up to $2.40. Also good to hear of other's experiences on how their case progresses and to see that several have had successful plans with early payoffs.

For good or bad I am ocd on many items (can't tell from looking at my desk) but I have everything in a spread sheet and download pdf's of every receipt. I've been able to match up everything on NDC to what I gave my lawyer for our original submission. Some were sold off to junk debt collectors "jdc", which is their loss since I am in a 100% plan. I know some of the jdcs buy for pennies on the dollar and then hope you get dismissed so they can add in back interest. Original creditors would have been better off keeping the debt and getting their full payment. Been tracking what is submitted versus what I expect versus what our lawyer had in our plan. Our original plan was overstated as some creditors used different names on the different credit reports, so that already gave me some cushion from double counting. Now, what was submitted is 20% below what I expected and 27% below what we submitted in the plan for the unsecured. Can't wait until the plan is confirmed and the trustee starts making payments.

Even have a spread sheet of all of the accounts and the current balances and till rates by claim. I can download the NDC ledger each month and track my outstanding balances. I now it is anal, but it will help me cope with our tight budget from the plan payment amount to see balances drop each month and know each month we are getting closer to the end. With a 100% plan, hoping for a raise next year so that my take-home can go up. Our payment won't increase so it will be an increase for us so I can start building up an emergency fund. Luckily cars are all 2017 and in good shape, but house could use some work - in the next couple of years needs new paint.

For those of you who are bored or also spread sheet monkey's like me, I have probably given enough percentages and dollars that if you are bored you can back into my claim amounts and monthly payment.