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

[TooMuchCredit]

This is actually a really good thread, despite the title!

Having wrote that, there are Trustees who will automatically object to any Plan which pays less than 70% to unsecured creditors. I have actually read this in a Mid-West Trustee guidebook!!! Trustees are there to squeeze you.

As HHM wrote earlier, the Trustee can object all they want, but a Judge is the final arbiter of what Plan gets approved. If you are basing it on B22C and feel it's good (even with $75 on a Schedule I/J), then go for it. Of course, your lawyer is your best resource for determining what the most prudent course of action is based on your Trustee and District.

For me, the $600/month car was a non-starter to begin with. If you're over $489/month and not paying 100% to unsecureds, you should expect a bad faith objection. If your lawyer didn't explain that to you... well... maybe he just missed it.

For the other things, I would fight the Trustee. Again, some of them just object to anything under a certain percentage... and I think that's unfair.

I am actually fine giving up the car, if it means I would get approved, but I would expect that I would be allowed to find another that would not exceed the $489 IRS allowance. Giving up my car shafts my current lender to the benefit of the unsecureds, however. They can't get what's owed on the car either. If I give up the car, I have very little to put down on another and I have to have a car that will reliably get me to a city 100 miles away once a week.

No reliable car, no job. No job, have to convert to Ch. 7 and no one gets paid, not even the 24-25% currently proposed.

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.

[justbroke]

This is actually a really good thread, despite the title!

Having wrote that, there are Trustees who will automatically object to any Plan which pays less than 70% to unsecured creditors. I have actually read this in a Mid-West Trustee guidebook!!! Trustees are there to squeeze you.

As HHM wrote earlier, the Trustee can object all they want, but a Judge is the final arbiter of what Plan gets approved. If you are basing it on B22C and feel it's good (even with $75 on a Schedule I/J), then go for it. Of course, your lawyer is your best resource for determining what the most prudent course of action is based on your Trustee and District.

For me, the $600/month car was a non-starter to begin with. If you're over $489/month and not paying 100% to unsecureds, you should expect a bad faith objection. If your lawyer didn't explain that to you... well... maybe he just missed it.

For the other things, I would fight the Trustee. Again, some of them just object to anything under a certain percentage... and I think that's unfair.

[TooMuchCredit]

Well, I got a response from my lawyer. As some as you said, now is not the time to panic

He says those objections were the trustee wanting more money paid into the plan. Apparently, the trustee wants some or all of the 5% I am contributing to my 401K, and my entertainment expense. I am not really comfortable giving up my 401K contribution. From reading here it varies from district to district their take on it. Here it appears they only allow it if it is mandatory.
It seems to me that this district puts more weight on Sched J than B22C. Since I am over median, B22C should be the final say on DMI, so I think there's a ceiling on what they can ask for. Disallowing my 401K contribution sends alot more to the unsecureds.

My attorney says if the trustee doesn't agree, it can all be argued in front of the judge. I think I can squeeze tad more out of my budget and maybe go along with taking some of my 401K contribution.

I hate the uncertainty.

[StartingOver08]

Well, appraisers are not all equal. There are appraisers that are experienced and can adjust to the marketplace and their are others that just have many years in the business, but do not possess the necessary skills to do a quality appraisal.

It is especially interesting that the Realtor, and the 2nd lien holder both have determined the value at $330k and this appraiser has come in so much higher. The comps are the basis of any good appraisal, so if the appraiser was using bad comps - its a function of his skill level.

I certainly would not use a bad appraisal for your Ch 13. Get another one.

[sirlostalot]

I have a comment and a question. It seems that appraisals do indeed run higher than the true value. I just had a licensed appraiser complete one on my house. He states that our house is worth 415K (county assessed at 433K). Interestingly, a top local broker did a CMA and states that she cannot sell our house for a dime more than $330K and would not consider marketing our house for more than $350K. Also my second trust holder just told me that they ordered an appraisal that came in at $330K. Being that our 1st trust is $369K, we were hoping that we could do a lien strip in 13. Interesting that the 2nd trust holder at $189K and most likely to lose something were upfront about their appraisal at $330K. I am trying to negotiate a principal curtailment/rate reduction right now with them - hoping that one way or the other it will work out. I am current on my first and behind on my second.

The Appraiser seems to be out of touch (the comps he used were not that great in my opinion). He also didn't take into account anything for condition, improvements, intended use, or outbuildings. I am pretty upset about it but what can I do? The district I am in requires an appraisal and not a BOP. He seemed insulted when I mentioned it to him and stated that it was his "opinion of value". Not sure if I can debate that with him...he implied that he was untouchable in terms of his opinion and that he didn't really care what I or my Realtor thought or if he was even in the ballpark. I haven't paid his bill yet so we will see about that. Any advice on best next steps anyone?

We have not filed and are not in a giant rush to file so would like to get this "right". My attorney hasn't been a ton of help on this as he is waiting on income data from my husband....so still things up in the air (more to this part of the story not relevant to the appraisal/value question).

[HHM]

But if they see the property is worth $X from a recent appraisal and the 1st mortgage is more than X, meaning if surrendered and foreclosed the 2nd would get $0, wouldn't an option for them to get 40% instead of $0 be incentive?

Anyway, no matter how slight the chance, I'll never know unless I ask them.

Correct, you should always ask. But you have to realize, they don't look at this issue like that. Go into our Collection Forum, nearly everyone cries, "why won't may credit card settle with me, if I file BK, they get nothing, boohoo". It's the same thing, they don't look at your loan on an individual basis, it is part of a basket of loans. Since you have already filed BK, you loan has already been makred for loss, they don't really care at this point that they wont get anything because they are already expecting to not get anything.

[StartingOver08]

Old appraisals have nothing to do with current market value.

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

The value of your house changes with the market. If you have an appraisal that is older than 90 days - or the sales are older than 90 days - then you do not have an accurate appraisal. It may have been accurate at the time - but in no way, shape or form does it reflect TODAY's marketplace.

The only way to know today's value is to get another appraisal. Or you can get a CMA from an experienced Realtor so you have a more accurate idea of value. But if you are going to be submitting your value to the Trustee to argue a lien strip or keep your house in BK, an appraisal is probably your best option to convince the Trustee of the current market value.

As to tax values - tax valuation is NOT market value. Remember, the property taxes are based on so-called market value AS DETERMINED BY THE TAX ASSESSORS OFFICE. It is not in the best interest of the tax assessors office to show true, current market value as it impacts how much you pay and therefore impacts how much the tax authorities receive in their budget. Naturally, the county/city is not looking to reduce their income -so the tax values are usually kept artificially high.

The Trustee's KNOW that the tax values run high - that is why they use those values. Also its a free public database, so its easy.

[arami008]

They also objected to my $75 a month entertainment expense on schedule J.

OMG. I just filed today and for that I put in about $100!

We have to eat out alot because my son goes to the hospital alot due to his condition. We also rent movies and take our kids out, not a lot though.

Yikes will this be a red flag? If needed to can I amend now before my 341 on 5/27?

Thanks

[Billssuck]

Sounds similiar to me wrt home payments

It sounds like we may be in the same boat. I don't have a current appraisal and I may need to get one it sounds like. For Missouri, the home expense item is $1,174 and my payments on my first and HELOC equal about $2000 a month. There is no way I could trim $800/month to make it work. Maybe it will work more favorable for us since we don't have any other excessive items (i.e. cars payments) to worry about.

We're filing hopefully on May 21st. I'm really not opposed to giving up my house if need be. However, we will be under the means for income and if I have to give up the house then I may pursue a CH7 instead of CH13. I'm looking at maybe loosing the house in a positive light because it is too much money even after a ch13 is finished and it's too big and too much to take care of with a toddler at home (and we're in our late 40's). My husband is having a hard time swallowing it, but I think life would be alot simpler and less stress without the home. Plus if we're so upside down in the house, financially speaking, then it may be better to let it go now instead of weighing us down for many years to come. Just my thoughts.

[TooMuchCredit]

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

I had an appraisal done in February. It came in low at $122K, on zillow.com at the same time it had estimate of $166K. On the petition I had listed $155K - kind of in the middle. However, I owe $236K total. The IRS rent/housing allowance for my county is $1156 and my combined mortgage payments are $2188. So I am just plain way over what they feel is acceptable.

So it's pretty much give up the house and find something closer to $1156 mon and give the difference to the unsecureds or keep the house and find several $100 more per month out of my other living expenses to pay to the unsecureds.

[Billssuck]

Mind if I ask you how you knew what your house was worth? For our area (Missouri) our house is expensive and our lawyer briefly mentioned that might be an issue. We are below the median (so three year plan hopefully for us) and our 4 cars (they are old and beat up with high mileage) are paid off. The biggest issue is our house. Three years ago it was assessed at $265,000 and four years ago it was appraised at $264,000 when we applied for and got a HELOC. Anyway, I am sure the appraised value is lower than that now but the assessed hasn't gone down to my knowlegde (heaven knows I'm still paying the real estate taxes for this amount). What did you use to get a truer picture of the value of your house? We currently owe about $242,000 with the first and HELOC and are current on both. I'm reading appraisals could be higher than the real market value.

[TooMuchCredit]

Ok, in your prior post you mentioned a voluntary cram down...that is probably a non-starter, getting your interest rate reduced, that is different. Its an option, but frankly, I would hold out too much hope. Second and third mortgages can't really participate in the Federal Modificaiton programs, so there is no incentive for them to help.

But if they see the property is worth $X from a recent appraisal and the 1st mortgage is more than X, meaning if surrendered and foreclosed the 2nd would get $0, wouldn't an option for them to get 40% instead of $0 be incentive?

Anyway, no matter how slight the chance, I'll never know unless I ask them.

[HHM]

Ok, in your prior post you mentioned a voluntary cram down...that is probably a non-starter, getting your interest rate reduced, that is different. Its an option, but frankly, I would hold out too much hope. Second and third mortgages can't really participate in the Federal Modificaiton programs, so there is no incentive for them to help.

[TooMuchCredit]

Also, the idea of talking to your home equity holders is a non-starter. They can't do anything.

Does that apply to all districts, though? I had asked my lawyer about trying to get my Home Equity lender to lower their interest rate (12.5%) to that of my 1st (5.625%). He asked the trustee who stated that he is not opposed to pursuing mortgage modification. My lawyer just has to file a motion if they agree to one.

So I think it is permissable to try to work with the mortgage holders. IF not my only option is to surrender the house. I don't have the $ to pursue an adversary proceeding to strip the 2nd. And I don't want diet of Raman and Mac & Cheese for the next 5 years. The lender would have to do it voluntarily. That is reaching but if they feel they'll get enough, maybe they will agree.

[TooMuchCredit]

Yes, before I send anything I am running it by my attorney. I sent him a bit more detail than I posted here.

It makes no sense to me either to shaft a secured creditor to pay more to an unsecured. But if you are underwater and they don't like the amount you are paying they just insist you pay a higher percentage to unsecured creditors. Since that eats into your food budget, it kind of forces you to give in and give up the secured asset.

In other districts they make it easy to strip those 2nd & 3rd liens. In mine, you have to take it to the judge paying your attorney $125+ an hour. So you have to have a few thousand to fight it. Since you re bankrupt, most people don't have the resources to pursue that.

Apparently, that is just the way it works in my district. It seems to be very credit card company friendly.

It was my mistake taking the advice prior to find this board and my attorney of getting a car that had payments above the IRS allowance. That has me more worried than anything as no reliable transportation, no job. And right now, no credit, no loan.

If anyone else has filed a Ch. 13 in N. Georgia, it would be nice to know if they had a better experience than I.