Question about Payments from trustee to creditors

[imbroke2]

Hi all my fellow 13s. Just wondering why my cars would get paid before my mortgage (all were in arrears when we filed). Is it because the cars depreciate in value from the get-go and the lenders want to get paid asap? We're in IL by the way.

[quickteg]

In my case, my car was paid off first because it was considered a secured debt, and they get preference over unsecured.

[imbroke2]

Well, my mortgage is secured of course; I don't care about the CCs. I'm just concerned about the mortgage and wondering why they're putting all my money so far to the cars. Anyone?

[lrprn]

Hi all my fellow 13s. Just wondering why my cars would get paid before my mortgage (all were in arrears when we filed). Is it because the cars depreciate in value from the get-go and the lenders want to get paid asap? We're in IL by the way.

The bk law sets the order that your debts are paid off within your Ch 13 plan. First secured assets like your cars are paid off in full. Next priority debts like IRS taxes and the arrearage on your mortgage are paid off. Finally your non-secured creditors get whatever they are going to get before your plan ends.

[MajorMike]

so, if my car gets paid off in the first 2 years and then has equity, can the trustee sell that equity or can I keep it and get a newer car?

[EveryDayAdam]

Only equity that you had when you filed your case belongs to the BK estate. Anything you get after filing is yours to keep...with a few exceptions, like winning the lottery or an inheritance.

[lrprn]

Anything you get after filing is yours to keep...with a few exceptions, like winning the lottery or an inheritance.

Actually according to the bk law as written, winning the lottery is ok to keep if you win AFTER your case is closed.

There's an infamous case in NY where a lottery winner filed Ch 7 then a month later after the trustee found him a no-asset case, he won millions. Since he did not voluntarily stop the filing and ignored a letter from the US Trustee, the court forced him to pay off his creditors in full with his winnings - http://www.thesmokinggun.com/archive/0120051lotto1.html

I wouldn't mind giving up less than 1% of my mega-winnings to pay off my creditors in full though...not a problem at all!

[coma]

Actually according to the bk law as written, winning the lottery is ok to keep if you win AFTER your case is closed.

There's an infamous case in NY where a lottery winner filed Ch 7 then a month later after the trustee found him a no-asset case, he won millions. Since he did not voluntarily stop the filing and ignored a letter from the US Trustee, the court forced him to pay off his creditors in full with his winnings - http://www.thesmokinggun.com/archive/0120051lotto1.html

I wouldn't mind giving up less than 1% of my mega-winnings to pay off my creditors in full though...not a problem at all!

Seriously! I'd gladly write those checks