Our chapter 13 journey has started

[justbroke]

The Chapter 13 Trustees tend to be like that. Act first, ask questions after.

[notreallyme]

So the trustee filed and got approval from the court to lower our monthly payment by $700 - the amount of the decrease in our mortgage payment. I really wish he would talk with us or our attorney before adjusting payments, especially since 1) we are in a 100% plan and 2) not all creditors filed so the original payment amount would have paid us off well before the 60th month. Still planning on paying off (after we get trustee and court approval) in March, so we will just set aside the extra that shows up in my paycheck into savings and use that as part of the lump sum payment in March.

[notreallyme]

Yeah, if I was in less than a 100% plan, I wouldn't make an extra payment - the trustee would just raise the payment to the unsecured. Plus in a less than a 100% plan, they trustee fee is actually coming from the available funds to pay creditors. In a 100% plan, the trustee fee is on top of the payment to the creditors. My wife and I looked at it - some cons of paying off earlier is that our parent plus student loans we took out to help our kids with school will come out of abeyance and even paying off early the bankruptcy will still stay on our record for the full seven years. Offsetting that the savings from the trustee fee will be larger than the amount of the student loans, so from that alone we will be slightly ahead. Then with the unsecured fully paid off, that part of our monthly payment will come to us and can go into savings or home repairs. Biggest part of the savings on trustee fees is coming from our first and second mortgage. Trustee is paying those, but basically was tacking on 10% on top of that. (although his fee just reduced to 8% in October).

[justbroke]

Nice to hear from you. If you can swing it, why not payoff early when you're in a 100% plan and have a lump sum available to make that payment. Otherwise I would resist.

[notreallyme]

It has been a long time since I posted, things are going smoothly. However, a couple of interesting things with our mortgage payment - want to see how our trustee responds. Like I posted earlier, last winter/spring our mortgage was sold to another bank (second sell in two years after the first one went bankrupt). well, when the mortgage was transferred, the old mortgage holder didn't transfer escrow account correctly (they did a few months later), so the new mortgage holder said we had a deficit so raised our payment 400 or so to make up the shortfall. trustee immediately ran to the court and raised our monthly payment by around $300 - this was even though our old payment amount would have still paid us off early even with the higher mortgage payment. (mortgage payment is inside the plan).

Well our mortgage holder just lowered our escrow payments by $700 per month starting 1/1/2026. I am interested to see if our trustee is in a hurry to scurry to court to lower our payment with the same urgency he had our payment raised. I doubt it but don't really care at this point. In addition, the mortgage company is going to refund over $5,000 from the escrow account as the account is new well above the allowable two months of payments. I am assuming this refund will go to the trustee.

As I said above, don't really care if the trustee lowers our monthly payment. I am going to receive a good size bonus in March. So I am going to talk with my lawyer in January (bonus might change if we have a really bad December so going to hold off until it is confirmed) and have him file a motion to pay off early and get a payment amount from the trustee. Based on the escrow refund amount and the extra $700 going to unsecured instead of mortgage starting in January, we would probably be fully paid in June 2026 rather than in June 2027 which is month 60. If we weren't in a 100% plan, I probably wouldn't ask to pay off early, but since we are in a 100% plan with mortgage inside the plan, this will save us a lot of trustee fees over the remainder of the year.

[HLS]

How many Missouri side I can’t remember my trustee’s name offhand

[notreallyme]

I am also in Kansas city. Filed 10/15

Kansas side or Missouri side. I am on the Kansas side and my trustee is Griffen.

[notreallyme]

Update that I should have posted a couple of weeks ago. Lawyer talked to trustee several times pointing out 1) we were in a 100% plan, 2)we had confirmed early on that tax returns were not required and 3) the current payment plan would have us 100% paid well before 60 months. Trustee said tough, keeping tax returns isn't spelled out in confirmed plan, so he can grab them. Lawyer then filed a motion to retain. As soon as that was filed, trustee sent out a letter dated the same date red stamped "update" that said we could retain tax return and bonus. I guess he thought he could just demand anything he wanted and our lawyer wouldn't fight. Up side, we keep the money. Down side, additional legal expenses (maybe - not sure if this is included in the upfront legal fee we paid or if this is additional). If the trustee plays the same game next year, we will probably be in a position where we can say fine and payoff the entire balance - of course that depends on the company having another good year and paying profit share.

[HLS]

I am also in Kansas city. Filed 10/15

[justbroke]

I could understand if it was only by a "slight" margin, which I'll just say is 10% difference. In that case, you may be able to argue that that small difference is not enough to get around that particular DMI issue. If it was 25%, 50% or more, I would argue until I turned blue. Thank you for the update.

Yes, budgeting for 18 months is horrible, though.

However, you should be able to replace a vehicle and the Trustee should not be interfering with that if it doesn't make your plan infeasible.

[notreallyme]

Thanks for the quick response. Those were my thoughts as well. Had that conversation with my attorney before the plan was confirmed, but said our trustee was a real stickler for dmi unless in the original plan that significantly made the number of payments less than 60 months. In our original plan, DMI would have just slightly overpaid the calculation you show. Then a lot of creditors didn't file, so plan payment would end 6 months early. Not worth fighting over that after the 341 meeting and plan confirmation, Now I'm a little steamed that the trustee still wants in increased payment above our original DMI - which included profit share and tax return in the calculation - plus tax return and profit share. I am not an expert on the code, but the little I read says a 60 month plan for 100% payback. Not payback as quickly as possible. Six months early I can live with and budget for. 18 months early is extreme and hard to budget for when taking the bonus makes it impossible to buy a new car or add to savings.

[justbroke]

Personally, I would never let the Trustee push me on paying DMI in a 100% plan. There is nowhere in the code that says this is the case. Of course some attorneys and Trustees will say "just get the plan done quicker." For me, that's a negative because life happens.

I would ask them to point to where in 11 USC 1325(b) says that? Maybe it's your district. The payment for someone that is significantly over the 100% should simply be (total unsecured debt) / 60 = monthly amount. Then add that monthly amount to the secured debt, priority, trustee, and attorney fees.

At least, those are my thoughts on 100% plans.

[notreallyme]

Ok, long post just need to vent. Been about 8 months since I last posted. Everything was goin good and then December hit. We were 30 months into 60 month plan and still on track to pay off 6 months early since the trustee required our full DMI rather than just enough to make our 100% payment.

We knew that we would probably need to replace my car in 2025 as it had over 200,000 miles on it. Planned on using this year's profit share (first time in three years the company was paying one, but 2024 was a good year) and an expected large tax return to pay cash for a new compact car - cheapest we could get since I don't car what I drive and my wife has a mid-size SUV for when the whole family rides together. Tax return was going to be fairly good size - my wife's employer barely withheld, so I had my withholdings increased to over her wages as well. Than they finally started withholding so we were paying in too much. I know, it is dumb to give an interest free loan to the government but the timing of the refund would line up with my bonus to allow us to pay cash for a car.

Then I totaled my car in December. Nobody was injured, damages weren't significant, but due to the miles on my car the insurance company declared it a total since its book value was so low.

So, we followed our attorneys advice - found a dealer willing to create a "purchase order' for monthly payments of $300 on a "vehicle or similar" basis. Gathered 2 months of paystubs and provided to our attorney. Well, the trustee said $300 a month would make our plan unfeasible. No problem, we would just share a car until March. Not ideal, but doable.
Then, in January, our mortgage company increased our monthly escrow. Insurance cost went up, so escrow went negative. They raised the escrow enough to cover the negative and build up a 2 month cushion by December of 2025. Again, no worries on our part. Plugged numbers into my spreadsheet and saw that the monthly plan payments would still cover the 100% plan even with higher payments to the mortgager. We would just end only one month early instead of six months. Then looking at Pacer, I saw our trustee went to court without notifying us or our attorney and unilaterally raised our plan payments by 250 a month. Apparently $300 a month for a car was not feasible, but $250 into the plan was. This put us back to paying off the plan six months early. Talked to our attorney - he said judge and trustee have a good relationship and the judge rubber stamps anything the trustee wants so no use arguing about the higher payments - it was a done deal.

Then the real kicker - trustee demands our tax refund (nothing in our plan says he can take it - plan specifically says all the payments are from paycheck withholding). Oh and also he wants this year's profit sharing if there is one. Putting those two together along with they higher wage withholding, plan will now finish 18 months early - paying 42 months on 60 month 100% plan.
I'm asking the attorney to fight this one - our plan was filed in May of 2022 so in the six month earnings period, it already had our 2021 tax year refund and our profit sharing for 2021. I argued at the time that this overstated DMI since the payment went into our six month income, was divided by 6 for average monthly - that basically says we would get profit sharing every six months, not once a year. Plus, as I described to our attorney profit share and tax return were already included in our DMI, so this was double dipping by the trustee. He says not likely the judge will agree, he always agrees with the trustee. He says the trustee can grab any cash we come into, even though we were already scheduled to pay 100% to all submitted creditors.

[Carmella]

Sounds like you are right on track and it's going according to plan. I also regret not filing for BK sooner than we did as I procrastinated a long time maybe a year or so after we saw the first attorney. Not to mention the time when we wouldn't even consider BK an option. But the good thing is in the here and now we DID IT and even if we regret waiting we are still coming out of it and able to make a new start!

[notreallyme]

Been a long time since I updated. Just hit our 2 year anniversary - filed 5/17/2022 and trustee made the first payment on 6/30/2022. So 24 payments down. Nothing has really changed - budget is still tight and unexpected expenses have kept our attempts to rebuild savings behind schedule. We were warned to expect "unexpected" expenses - glad we listened and have set a little aside in months were we get ahead of current expenses.

Secured including arrears were paid off last year, so payments go towards trustee fee, mortgage and HELOC and then to unsecured. I am paid bi-weekly, so trustee gets two payments most months and three every sixth month. On average about 3.3% of the original unsecured is paid down each month. This puts us still on track to end after 48 payments rather than the full 60 months in our plan. Will take a couple of months longer than I first thought - when we started the trustee fee was 6%, it is now at 9%. Still lower than the max allowable of 10%, but does send a couple hundred more a month to the trustee instead of to the creditors.

Not looking for credit, but it is nice to see our scores slowly climb each month as the average age of our accounts increase and the time since last delinquency gets older. Went from low 520's to just over 600. Will follow the tips in rebuilding your credit score post once we are discharged. We are a little ahead on that as the trustee approved getting a small credit card for business travel.

Wish we had bit the bullet earlier and filed bankruptcy sooner before we got so far behind. Live and Learn I guess, but hoping to not go through this again and we plan to continue to live on a budget like we have been forced to during this process.