Just back from 341 Meeting...didn't go so well

[TooMuchCredit]

Ok, my objections are out on Pacer...all 10 of them. The trustee did move to deny confirmation and dismiss the case.

It seems several are due to the trustee looking at a district specific "Chapter 13 Plan" document. It was originally sent in the original filing in error - it had some other plan's info on it. My attorney sent in an updated form. It still had a couple mistakes on it. It lists the $ amount to be paid to unsecureds and what that % is. Well the $ was filled out, but the % was 0. An easy to fix thing.

The trustee argued that since the car was the only creditor paid in a 0% plan it was an attempt to refinance it and to pay it and none to unsecureds was not in good faith. The car, 401K, and entertainment expense were all argued that I was not providing all of my DMI to the plan.
The doc also left off the mortgage payments outside the plan.

However, the official schedules were correct or close to it.

The negative equity in the house was mentioned as being not in good faith either. I recall reading that a large house payment may not be considered a good faith objection. I think that was in a California district though. Something about if Congress didn't intend to allow the actual house payment B22C would not allow the actual payment to be entered.

So it looks like it might just be a matter of correcting the plan doc, and Sched. I & J. B22C needs one slight adjustment as well. My plan is actually in the 20-30% range so just making those corrections might drop several of the objections.

B22C is SUPPOSED to govern the DMI in above median cases, so probably can fight whatever they argue about on sched. J.

[justbroke]

well he was an interesting guy. if you read his website he talks a lot about pre-planning within the law. his wife runs his front desk, and kept telling me he was an ethical Att, and some people don't like that but he gets many referals direct from the judges. gave me the impression he probably works well with them . All he does is Bk, 30 years same location.

I don't think he's unethical at all. There is nothing which could probably come of some things that he suggests, other than bad faith objections, but even that is hard to "prove".

I like him. He is operating within the law and is nice enough to actually offer "advice" to his clients. Some BK lawyers just don't want to offer any advice and only make limited suggestions and tend to just get through with that particular bankruptcy. I don't even think it's a question of rocking the boat... I think it's a question of there are lawyers there to advise and counsel their clients on the full benefit and things you can do with pre-bankruptcy planning and in the bankruptcy, and the others that are just BK mills who just churn out debtors, trying to do as little as possible and earn a sizable fee.

(No, this isn't lawyer bashing, just a perspective on the types of BK lawyers out there.)

How can you tell if you're in a BK mill? They never even suggest you get a new car or miss some mortgage payments since you're filing... or anything like that.

(On the other hand, with regard to missing two mortgage payments... if your BK is dismissed, then you'll have to make up those two payments, or be ready for an NOD and foreclosure. Yes, it's a strategy, but is it a winning strategy, I'm unsure. Great lawyer though!!!)

[albacore44]

It's all about strategy. Plus, those two "missed" payments, you can use for other "necessities" like stocking up on food, getting medical work done, getting new clothing, fixing a car, etc.

He's smart, but I've never heard of a lawyer actually giving "constructive" ways to save money in your Chapter 13. Most skirt around the issues.

well he was an interesting guy. if you read his website he talks a lot about pre-planning within the law. his wife runs his front desk, and kept telling me he was an ethical Att, and some people don't like that but he gets many referals direct from the judges. gave me the impression he probably works well with them . All he does is Bk, 30 years same location.

[justbroke]

the guy I consulted also said I should miss a couple of mortgage payments to throw those into the plan so there was less for the unsecured. I almost messed my pants, since I have never been late on the mortgage, and the thought of that floored me. I can understand the strategy now

It's all about strategy. Plus, those two "missed" payments, you can use for other "necessities" like stocking up on food, getting medical work done, getting new clothing, fixing a car, etc.

He's smart, but I've never heard of a lawyer actually giving "constructive" ways to save money in your Chapter 13. Most skirt around the issues.

[justbroke]

Some of these trustees must really be smoking some good dope. What's the point of doing a ch13 if you're going to lose your house AND car??

Some are smoking something, but the majority are operating within the Bankruptcy code and their charter from the U.S. Bankruptcy Court. There is nothing in the Bankruptcy Code that you can keep all your worldly possessions at all. A Chapter 13 presents an opportunity to keep those things, but, in reality, most people can't afford to keep all those things. It's the reality of it.

Might as well just quit working and file a chapter7.

That's why pre-Bankruptcy planning is essential. In some cases, it makes sense to wait it out to file Chapter 7. However, not every debtor is so easily satisfied by a Chapter 7 Liquidation.

In the ranking of things i'd like my plan payments to go towards, I'd still rather spend money on the lawyer than the unsecured creditors. Adversary proceeding? Bring it on. My lawyer gets paid out of plan assets also, correct? Meaning the BK estate is paying for the lawyer ultimately (he says, hoping to hear someone say this is true).

What lawyer told you that?

A lawyer's payments come out of your Plan. However, he generally has to apply for all his fees prior to or at confirmation. Adversary Proceedings can be very very costly (more than filing Bankruptcy itself). If your plan cannot afford to pay the lawyer for APs, then your plan won't be confirmed. It's a vicious circle!

Worse, is that they aren't just being "paid" in your Plan. They are being as a priority unsecured debt and are paid at the same priority as the Trustee. This just means the lawyer gets his money before everyone else. However, if you can't afford the plan, which does happen, then it can't be confirmed.

If it was as easy as just using your plan assets to pay a lawyer to fight everyone, every lawyer would be advocating this! It's just not that simple. In the end, it comes out of your POCKET, not out of "plan assets". Remembering that the money in your Plan is your money, just distributed to creditors.

[albacore44]

Some of these trustees must really be smoking some good dope.
What's the point of doing a ch13 if you're going to lose your house AND car??
Might as well just quit working and file a chapter7.
Just remember, this is just a prelude to negotiation.
In the ranking of things i'd like my plan payments to go towards, I'd still rather spend money on the lawyer than the unsecured creditors. Adversary proceeding? Bring it on. My lawyer gets paid out of plan assets also, correct? Meaning the BK estate is paying for the lawyer ultimately (he says, hoping to hear someone say this is true).

the guy I consulted also said I should miss a couple of mortgage payments to throw those into the plan so there was less for the unsecured. I almost messed my pants, since I have never been late on the mortgage, and the thought of that floored me. I can understand the strategy now

[catleg]

Some of these trustees must really be smoking some good dope.
What's the point of doing a ch13 if you're going to lose your house AND car??
Might as well just quit working and file a chapter7.
Just remember, this is just a prelude to negotiation.
In the ranking of things i'd like my plan payments to go towards, I'd still rather spend money on the lawyer than the unsecured creditors. Adversary proceeding? Bring it on. My lawyer gets paid out of plan assets also, correct? Meaning the BK estate is paying for the lawyer ultimately (he says, hoping to hear someone say this is true).

[albacore44]

There are no guidelines for mortgage payments.

For all cases, Congress and the Bankruptcy Code indicate that a persons residence is necessary for an effective reorganization of the debtor. That plainly means... that the (BK) Court and the Trustees are not to question a debtor's need to keep their residence. However, Trustees can bring a bad faith objection when the residence has severe negative equity (is underwater) and the debtor is desiring to keep it, while unsecured creditors are paying the penalty.

I'm a perfect case for "necessary for effective reorganization of the debtor". If I didn't keep my house, I'd be in a 100% plan. However, I had no objections (bad faith) as I stripped the second and I'm only 5% in negative equity on my home! However, if I couldn't strip my second, I'd be 30% negative, and I'm sure a bad faith objection would have come about! (But, alas, I'm smart enough to know, not to have kept it without the lien strip.)

Ok. that clears it up. i'll have to check and see how the trustee in this district is looking at things . Heck the whole IE is underwater

[justbroke]

Yeah, It was wink.....wink, this is what you should do. But I'm still confused about about the mortgage payment issue that HMM posted. I did not see any guide lines that limited you to a certain amount for a mortgage payment. Mabee i missed it.

There are no guidelines for mortgage payments.

For all cases, Congress and the Bankruptcy Code indicate that a persons residence is necessary for an effective reorganization of the debtor. That plainly means... that the (BK) Court and the Trustees are not to question a debtor's need to keep their residence. However, Trustees can bring a bad faith objection when the residence has severe negative equity (is underwater) and the debtor is desiring to keep it, while unsecured creditors are paying the penalty.

I'm a perfect case for "necessary for effective reorganization of the debtor". If I didn't keep my house, I'd be in a 100% plan. However, I had no objections (bad faith) as I stripped the second and I'm only 5% in negative equity on my home! However, if I couldn't strip my second, I'd be 30% negative, and I'm sure a bad faith objection would have come about! (But, alas, I'm smart enough to know, not to have kept it without the lien strip.)

[albacore44]

Yeah, It was wink.....wink, this is what you should do. But I'm still confused about about the mortgage payment issue that HMM posted. I did not see any guide lines that limited you to a certain amount for a mortgage payment. Mabee i missed it.

[justbroke]

Now let's say his car payment was $489 or less, could the trustee gripe about that ?? The 1st attourney I consulted, and he was a good one, reccomended I buy a car, so I could get the $489 deduction.

Absolutely not! This is where a good lawyer, or someone who knows how to maximize your Plan, is going to help you.

The (IRS) allowance gives $489 per car (nationally) for the ownership costs. I kept a car, because the payments (spread over my plan duration -- of 60 months -- combined with the cram down) were $203/month. However, form B22C allows me $489 for the car. that's $286 more to me, and not my disposable monthly income (DMI). Trust me, I went through this many times, trying to get the optimal (lowest) DMI and money in my budget. If I had given up the car, it would be $489 to the unsecured creditors and less money in the monthly budget ($286 to be exact).

As I'm sure HHM would concur, this is where a good lawyer who knows how to maximize your budget in a Chapter 13 really goes far. I didn't use a lawyer personally, but I figured out how to maximize my budget quickly. I did this because I created my own B22C spreadsheet (which is actually more complex than B22C), that gave me the ability to do what-if scenarios (like what if I surrender the/a car).

The first attorney you consulted with was smart. I bet he said to buy a car that would cost $300 or less a month so you could get the $489!

(And all of the assumptions in this post are for an above median income petitioner/debtor.)

[albacore44]

You seem to have what they call "textbook" Trustees in your District. The only way you're keeping the $600/month car, is to pay all unsecured creditors who file an allowed claim, at 100%. It doesn't make sense and is counterintuitive (with the whole job thing), but they don't think that way.

Many Trustees are hypertechnical when it comes to allowances. Mine seems more down to earth, but I keep hearing on this board where people, like you, get grief over 401(k) contributions, when the new law clearly allows it!!! Don't give up on your 401(k) just yet. Even if you gave part of it back to the plan, the Trustee still won't let you keep that car, AND, the Trustee will still get more money.

Now let's say his car payment was $489 or less, could the trustee gripe about that ?? The 1st attourney I consulted, and he was a good one, reccomended I buy a car, so I could get the $489 deduction. He said that would keep me in a below 10% payback plan, and would I rather pay for a car, or be wasting money paying off the secureds in the plan.

still not sure if I'll be pushed into a Ch-13 yet. consultation was based on income at the time, and it's less now and still reducing.

[justbroke]

If all they are seeking is the difference in the $489 allowance and the ctual payment, then maybe I will consider giving up part of my 401K contribution to save the hassle and not have to find a clunker at 24% interest.

You seem to have what they call "textbook" Trustees in your District. The only way you're keeping the $600/month car, is to pay all unsecured creditors who file an allowed claim, at 100%. It doesn't make sense and is counterintuitive (with the whole job thing), but they don't think that way.

Many Trustees are hypertechnical when it comes to allowances. Mine seems more down to earth, but I keep hearing on this board where people, like you, get grief over 401(k) contributions, when the new law clearly allows it!!! Don't give up on your 401(k) just yet. Even if you gave part of it back to the plan, the Trustee still won't let you keep that car, AND, the Trustee will still get more money.

[dpeters]

If trustee didnt recommend dismissal on your case then your ok, just provide whatever documents trustee wants to see. Also trustee is objecting about the recreation expense because trustee thinks that if your behind in payments then you shouldnt be spending money on that but save it so you could have money to pay the plan payment. About your home equility lines you should probaby tell your lawyer to do a motion to strip or an adversary proceeding, it all depends on what are the requirements for the judges.

[lrprn]

...maybe I will consider giving up part of my 401K contribution to save the hassle and not have to find a clunker at 24% interest.

Just so you know, there is very strong case law in several bk districts protecting full contributions into a 401K during a Ch 13 bankruptcy. Push your lawyer a bit - let him/her fight for your 401K before caving in.

You can hang out without being confirmed while your lawyer wrangles with your trustee. It won't change your payments until a final decision is made, and due to the existence of case law protecting your right to keep contributing to your 401K during an active 13, it's definitely worth fighting your trustee on this one. Don't just settle!

We didn't settle when we had the very same 401K contributions objection from our trustee when we filed our 13 - and guess who won when the judge decided? We did!