My case so far, lots of questions, including q's about dismissal...

[becky20]

DH and I filed ch 13 in July of 08. Were lein-stripping our two cars (with a credit union) and were going to keep our home. Credit union is fighting the value of the cars and, 9 months later, still not confirmed because CU and atty are duking it out over the values... In the meantime, we decided to give up the house. Moved out and are renting a house from my parents. Also, in January, we were in a car accident (other driver's fault). DH just finally had surgery on his knee (after physical therapy did not fix the problem). We are expecting a settlement from the accident, I have no idea how much. If it ends up being a large settlement (everyone is telling us we should expect 3 times the medical bills, and with dh being out of work for 5 weeks total, months of physical therapy, and a surgery, we're racking up the costs) dh is thinking 100K. I think he's way off and he'd be lucky for half that. In either event, I have the following questions (a bit premature since at this point we're just speculating on how much of a settlement we're talking about)...

If we get a large settlement, we'd probably do a voluntary dismissal, buy 2 newer used cars (since the CU would probably repo the two cars we have now), and negotiate to settle with the creditors themselves.

1) What happens to the money that we've paid into the plan so far - we're talking about approximately $6K paid into the plan... (which was for the cars, paid into the plan, arrears in the mortgage and included in the plan, and that's about it, it was a 0% payback I believe). If it hasn't been confirmed yet, have they paid any creditors yet? Would the trustee take it all? Pay off my atty? Take his portion and refund the rest to me?

2) What should we expect for negotiations with the creditors? If we owed $6K to a credit card, would we expect to settle for 25%? Less? More?

3) What difficulties could we expect from the credit union? We owed them for a 2nd mortgage (home being foreclosed on), a 10K credit card, and our two car loans? I'm guessing they would repo the cars, and then start working to collect? what would they collect on? Just the credit card? The credit card and part of the balance on the cars? The 2nd mortgage too? Or would that be covered with the foreclosure?

4) Would the trustee just take a portion of the settlement, enough to pay off the creditors, his fees, the attorney fees, and the cars? And then discharge??

I'm in Arizona if that makes a difference. Any opinions or experience would be great!!

[optimistic1]

1) What happens to the money that we've paid into the plan so far - we're talking about approximately $6K paid into the plan... (which was for the cars, paid into the plan, arrears in the mortgage and included in the plan, and that's about it, it was a 0% payback I believe). If it hasn't been confirmed yet, have they paid any creditors yet? Would the trustee take it all? Pay off my atty? Take his portion and refund the rest to me?

All liens that you had removed from your property in the 13 are reinstated. All money paid to the trustee that has not yet been paid to creditors will be returned to you less the trustee's expenses. And certainly a portion or all of the attorney's fee may be deducted from what they will give back to you, they wont work for free.

2) What should we expect for negotiations with the creditors? If we owed $6K to a credit card, would we expect to settle for 25%? Less? More?

They will settle for sure, but I have read disturbing reports about some creditors saying it is settled, but then they turn around and sell the remainder to another Junk Debt Buyer, although, if they tried suing you and you had a letter from the original creditor settlement, then they would have no case whatsoever.

Keep in mind, that some creditors, will simply not settle at all and just sue you. Chase for example is a notorious from what I have heard thus far.

Bank of America, was willing to settle with my wife and I a 11,000+ debt on three credit cards, for a mere $2200.

Keep in mind that unless you can prove insolvency to the IRS, that when you get a boat load of 1099's, you will be in a higher tax table, and you will end up owing the IRS.

3) What difficulties could we expect from the credit union? We owed them for a 2nd mortgage (home being foreclosed on), a 10K credit card, and our two car loans? I'm guessing they would repo the cars, and then start working to collect? what would they collect on? Just the credit

Credit unions simply do not give up easily, and I have read several posts about how they object to value's on vehicles, your not the first.

I live in AZ too, although im not delinquent on my mortgage, and I believe certain state laws will leave you liable for some of the mortgage if it is foreclosed upon, but Im not sure, someone else may give you a better answer. Yes, they would repo the vehicles for sure, unless you pay them. The credit card, is most likely issued from another bank that is not associated with them, thats how our credit union worked. They (the credit union), could care less about the credit card debt, they never loaned us a dime for it. So you might be able to settle it.

4) Would the trustee just take a portion of the settlement, enough to pay off the creditors, his fees, the attorney fees, and the cars? And then discharge??

In a chapter 13 case, with a few exceptions, the trustee has no claim to property you acquire or income you earn after you file. You are free to spend it as you please. The exceptions are, property from an insurance settlement. So in that event, and I'm not quite sure if the 180 day rule applies to that type of acquisition, but the trustee would likely get his filthy hands on it to send off to your creditors. But dont quote me, I am a newbie even though my user name says "mentor".

Wait for some more great answers. Anyway you look at this, you will eventually get back on your feet.

[becky20]

Thanks Optimistic One! So when you say the exception is "property from insurance settlement", what exactly do you mean? If that settlement money were exempt, because it was after our filing, that would be SWEET! I did ask the attorney after we had the accident, and he said "we'll see if we have to even notify the trustee". I got the feeling it would depend on the amount of the settlement, and what it covered - if it were only lost wages and medical bills, we're fine. If there is "pain and suffering" payment, then we might be in trouble and have to pay...

The 60 month clock starts when you make your first payment, right? NOt when you're confirmed???

I would hope you're right about the credit card with the credit union, I've never heard that... It's AZ Federal, not sure if you have heard anything about them. Up til now they've been a major pain!!!

[optimistic1]

Your attorney would have the inside track as to whether or not you need to notify him. The exception means that they would be entitled to take the money from you, or at least some of it, to pay creditors. But, don't quote me, and don't quote your attorney, some attorney's advertise that they know how to do a bankruptcy, but in reality they don't. One way or the other, he will find out what the law really is pertaining to a settlement. If you are planning on a dismissal, then the trustee wouldnt get anything from the settlement, not a dime.

Correct, that is why you most likely have already been making payments, it is not from the confirmed date.

AZ Federal, not the one we have, but let me ask you this. When you go this credit line, who does the payment go to? What does it say on the card and the back of the card, and on your credit report?