Question about payments to secureds?

[justbroke]

Thankfully, I am lucky, lets hope that the other one is the same, there are two that cover my county, I couldnt get in touch with the second one.

Hey Justbroke,

I have an off topic question for you, what is the Monthly Adequate Protection Payments stuff all about with secured loans within the plan, for a car loan specifically.

How are these determined?

usually you don't even need to deal with these. Sometimes, having a Plan is enough "adequate protection".

I dont' even think people use the adequate protection payments so much. It was just to make sure that the value of the collateral didn't depreciate faster than the payments. This was so that the creditor didn't keep losing value in the collateral.

For example. Say you propose a plan to pay your car off. It's value is $5K. So you pay $5K within the 60 month plan. However, you decide to pay the whole $5K in a lump sum (pro rata) in month 59. (Just saying that for argument's sake... and nothing prevents you from proposing such!!!)

The lender could complain that the value of the collateral will continue to shrink during the plan. If you fail your plan, then the lender would have even less value, because you weren't contributing "adequate" payments during the plan.

Hence, the term Adequate Protection.

So, using the same example, say the value of the car decreased $30/month over 60 months (or $3K). You could propose to pay $30/month for the first 59 months and then pay the rest in month 60. That would be "adequate protection".

I've never seen anyone use these adequate protection payments. Generally, the lawyers will propose mostly even payments spread over the term.

[optimistic1]

Good, hopefully that will be the case with mine, as adding them in would increase my plan payment or length, of which both I do not want to pursue.