Slightly In Panic Mode..

[FreakingInCali]

Okay maybe not slightly.. But I'm PRAYING someone here will be able to help me sleep through the night.

So basic overview. We filed a Chapter 13 in August, we've made two payments to the trustee so far. We did the 341 Meeting and the Trustee was concerned that the value of the equity in our house is too much to file a 13. (I should note the value of the equity in our home is also too little to try to refinance given our current credit status, we need at least 80% equity, we have like 75%)

An objection was filed and our attorney told us not to worry, that we'd be filing an ammended plan. Our confirmation hearing was on the 23rd, and today I received a Minute Order Sustaining the Objection to Confirmation. Of course, I got the mail 15 minutes AFTER my lawyers office had closed.

So what's next? I've seen that a lot of people have had issues getting confirmed. Is this the standard letter? Or should I be more concerned?

Slightly freaking out here.. Any words of wisdom or soothing GREATLY appreciated.

[BKOnce]

Trouble with legal jargons again!?... "Sustained" = Agree/Approve/OK, and "Overuled" = "Not Agree/Not Approve/Denied/Not OK"...

[FreakingInCali]

No no.. I understand that means the judge approved the trustees objections. But what I'm trying to figure out is are we now going to have to appeal the decision? Can you? Is this going to force us into a 7? Are we going to lose the house? I'm just trying to figure out what the next step is, and if anyone else has had this happen and still successfully done a 13..

[rrockinggramma]

One of the basic rules in a chapter 13 is that the creditors must receive what they would have received had you filed a ch 7. So the trustee is saying that to make the plan meet the criteria you will have to pay your unsecured creditors more in all likelyhood. Now if you are already paying them back at 100 percent, then you would have a problem. But if you aren't, then you are probably going to end up paying more into your plan than you are now. With your 80 percent equity in your home (meaning that you only owe on 20 percent of the value) would you be able to pay off everything you owe to everyone? Your attorney will negiotate with the trustee and try to work out a compromise that all can live with I suspect but it will probably delay your confirmation.

[FreakingInCali]

Okay.. So, this isn't over yet. But we're probably looking at a higher plan payment. So its up to my lawyer now to revise the plan payments and show the trustee that we can make the higher payments? I can live with that if we know we aren't losing the house. That's my biggest fear.. Trying to find a new place to live..

[vleisme]

FreakinginCali,
We are also in Cali and are filing ch. 13 tomorrow 11/1. How did you determine the value of your home with the house market on such a decline? Our atty. just let us come up with an estimate of our own we based on a previous appraisal from a year ago and took off some for the slow market. I am now wondering if that will come back and bite us when we file.I wonder if the trustee will want an appraisal??

[FreakingInCali]

Well we had an appraisal done before the BK filing to try to refi the house. The appraiser valued us at $350k but we needed a $380k value to do the refi. But with the current market as it stands, houses are totally decreasing in value daily. I'm hoping that the Trustee will see that to try sell the property in this market is going to be next to impossible and will work with us. Sadly, at $350k we have more than $75,000 in equity, which is the limit in a Chapter 13. Our attorney is trying to work with the trustee in saying that closing costs and fees associated with selling will bring us under the $75,000 mark. I'm hoping the trustee and judge will agree. If I have to I'll ask our attorney if another appraisal might be the way to go.

I know in July when the nightmare began I did some research on Yahoo to get an estimated value on my home. It was listed on one site for as high as $401k. When we had the appraisal done in August it came in around $350k and right now it's listed estimated value on Yahoo is at $330k. That's a $70,000 jump down in 4 months. Course it helps that one comparable house in my neighborhood sold for only $278k in September, but even so, the market is thrashed here.

To answer your question though, at the 341 meeting he asked everyone including us how we came up with the value of our property. Most people said based on an appraisal from a year ago and it didn't SEEM to be a problem. If your attorney said to take a little off for the slow market, I'd say they're probably right. You might want to try plugging your house into the Yahoo site and taking the average from there too.

The really frustrating part about this for us is our unsecured debt is only $3000. Everything in this bankruptcy is basically about the house. About 4 years ago we cut up all our credit cards and paid off all but the $3000 remaining. Unfortunately I lost my job awhile back, and the unemployment ran out before I could find a new one which put us behind on our mortgage big time. Thankfully I'm working again, but over $11,000 in back mortgage payments, plus the adjustable rate going up has really caused us a big problem. That combined with our mortgage company losing paperwork on us and our request for payment arrangements not once but TWICE forced us to file the 13. Nothing like calling up a company and asking if they'd received your faxes, getting a yes, and two weeks later finding out not only did the paperwork they said they received didn't make it to the right person but your house is being listed for Auction in less than a month.

[FreakingInCali]

Oh also, Gramma I got my numbers reversed. Basically we owe $250k on it, and needed to have it appraised at $380k to get a refi. It only came in at $350k, which basically took us to panic mode. I just keep thinking if we'd tried to refi a couple months earlier this whole mess may not have happened. The market was better then and lenders weren't freaking out about the number of foreclosures and tightening their belts. Hindsight as they say

[SinkingFast]

Even tho the Trustee is gonna haggle,.......... It's just to get more money from you.

Even the Trustee would have costs to sell if he/she seized your home and sold it. They don't do it themselves. They have a RE Broker do it for them.

On average, it costs a Trustee 10% to sell a home. They don't move quickly. And they don't bring top $$$ like they would if it were owner/occupied.

AND THEN,........... You get your $75K Exemption monies. Before the Trustee gets a cut, you get your Exemption monies.

So this all about getting extra bucks out of you over the course of your plan. And your attny does have a valid arguement.

[FreakingInCali]

Okay.. My husband is about ready to throw in the towel.. But I told him look, I found this forum, and it looks like lots of people have had issues getting confirmed. Hopefully this will help him. After our experience with the mortgage company we hate putting our house in anyone else's hands, and its just so hard to just sit and do nothing while my attorney works for us. Everyone keeps telling us not to worry, but I seem to recall the lovely woman at the mortgage company telling us that after she received our fax :P

He's just so frustrated. I'm having panic attacks almost daily (which is such a joy). If it was just us it wouldn't be such a big deal. But we've got two younger children in this mix who don't have a clue of what's happening.

[rrockinggramma]

well first of all, relax. The trustee from what I see offhand (not legal advice) is probably looking for you to pay the difference into the plan of the 350,000 appraisal minus the 75,000 exemption allowance. (that is high. LOLOL in Mich we get a whopping 7500!!!!) so you owe 250,000, the difference then is 25000.00 Since chapter 13 is all about compromise, your difference will end up somewhere in the middle. Let your lawyer work for you. You might end up paying a little more but in the end it will be worth it. Good luck!