Claims Question

[Jman30]

Hello - I am now 13 months into a 48 month Chapter 13. Perfect payment history, no major issues with the Chapter 13. Everything seems to be going along as planned.

I got a Transfer of Claim Notice in the mail the other day. Apparently, one of the creditors who I originally included in the Chapter 13 sold the account to a new collection firm. No sweat off my back - I don't really care who holds the debt at this point.

But what is the purpose? Why would one creditor sell an account already in a Chapter 13 to a new collection agency? What is to gain from either party?

[StaciMM]

It happens in business all the time, its called factoring. The original creditor would rather a lump sum NOW instead of monthly payments over time. They sell to another company, at a discount (so they get less NOW than they would if they were patient).

It might be a cash flow thing, where the cash NOW is more important and the balance over time.

[bkfiler]

also, like you said it makes no difference to you. you are doing fine. congrats on keeping the plan working.

you are in the 10% category out of all the chapter 13 plans. most fail and i bet even more will fail with the new laws. in fact, i guarantee it.

[Jman30]

Thanks BK. I appreciate those kind words. The first months of the Chapter 13 were literally hell. But over the last year or so, we've gotten into a routine with it. Granted, it is not easy, but as long as I stay healthy and keep working, it should be ok.

I never thought I would get through the first year, but now that I am in the second year, I am confident I can see this thing through.

I think after the 36th payment, I may try to refinance out of the Chapter 13 entirely and end it a year early, as I have alot of equity in the house.

Why, in your opinion, do most Chapter 13's fail??

StaciMM, thanks for your information as well. I figured it was something like that.

[StaciMM]

My opinions as to why they fail...

#1 If someone files to stop a foreclosure, they might willingly default once the house is caught up & out of jeopardy.

#2 A person's financial standing can change significantly in 3-5 years. Attorneys are not always easily available to their clients, so clients who lose income may not realize they can amend the plan.

#3 I think alot of filings have unrealistic budgets-where everything is not accounted for. Its easy to forget things that come due 1-2 times per year. (Refer back to #2, attorneys may not try to be thorough or helpful, and are hard to reach after the majority of the work is done.)

[bkfiler]

the facts are that chapt 13 most always fail. the reasons many but the major ones from waht ive read are:

1-you are asking people that couldnt pay bills before to now pay their bills. thats not easy.

2-the expenses listed is way to difficult to get right and then the court excepts it. no one helps make sure the filer gets it right.

3-most filers got into the situation because of not managing their expenses, and now they were asked to make a list of exepenses. they leave to many out. its not like they are instantly goood at doing such a list.

4-it doesnt allow emergencies.

5-people dont want to pay it anymore. its just like another bill to them and if they let their other bills go then this one is no different.

[Jman30]

I would agree with that. My attorney is definitely NOT responsive and not even always accurate. It is a numbers game in his firm - I am just one filer of a bankruptcy out of the hundreds of cases he must see each week.

Most of the time, it is my own research and careful reading of the documents that finds the errors or items I want to have looked it. My attorney must think I am a pain - I am always meeting with him, making sure I understand the process and where we are next. And I can tell I am bothering him - he tends to sigh alot and answer my question before I've even finished saying it!

But I think after all this time, he sorts of respects me now, even if I am a pain. At least I am trying to be successfull and follow through on my obligations. I can see how some of the people he represents just don't even know enough to read what they are signing. They are bringing in their financial documents in a big unruly pile with no sense of where they are or no organization.

I truly believe that a big part of being successfull in a Chapter 13 is being very vigilant yourself - you have to read everything and make sure your attorney is doing his/her job. As they say, the squeaky wheel gets the grease!!

[bkfiler]

very true. always use an attorney and you can trust him, i dont, but you must always verify.

[Jman30]

Going back to something StaciMM said up above - I know you can modify your plan, I've done it a few times already. As you can tell, I am pretty active with my Chapter 13 - I don't just sit back and let it go. I really keep up on what is going on and where I stand.

I plan on seeing this through until the bitter end - say I hit month 48 and I make my last payment. Any experience how long the Trustee takes to tell my employer to stop garnishing my wages?

I have ongoing nightmare that I hit month 48 and then can't pay my mortgage in month 49 because my employer is still taking the money and sending it to the Trustee. Then I am late on a mortgage payment and right back in the same boat I started in!

[StaciMM]

Your involvement & research will make you successful.

From what I've seen, it can take a while for the payments to stop. You get a refund, though that doesn't solve the immediate cash crunch. Would it be possible for you to stop the direct pay, and start sending in payments?

Going back to something StaciMM said up above - I know you can modify your plan, I've done it a few times already. As you can tell, I am pretty active with my Chapter 13 - I don't just sit back and let it go. I really keep up on what is going on and where I stand.

I plan on seeing this through until the bitter end - say I hit month 48 and I make my last payment. Any experience how long the Trustee takes to tell my employer to stop garnishing my wages?

I have ongoing nightmare that I hit month 48 and then can't pay my mortgage in month 49 because my employer is still taking the money and sending it to the Trustee. Then I am late on a mortgage payment and right back in the same boat I started in!

[Jman30]

Staci, It is funny you say that. I remember my attorney saying that towards the end, we can modify the plan to stop the garnishment a few months before the end and make the payments via check or whatever. Thanks for jarring my memory!

I think another item that helped me was then I first filed, I went through every single little thing I owed, no matter how small, and put it on the paperwork to be filed. I spent days and days making sure amounts were accurate, phone numbers and addresses of creditors were correct, etc.

In the end, I forgot one item and when they filed a claim, I disputed the amount. They had 20 days to reply to my dispute, they never did and the Trustee then dismissed the debt.

[bkfiler]

thats what i would do toward the end.

regarding the mortage. im trying to learn more about chapt 13. your mortage is included in your bk payments i assume. how does all that get worked in. if you owe 200K on a home how does chapt 13 work that in?

[StaciMM]

I *think* the ch. 13 would include payment for the past due mortgage amount. It may or not may not include the ongoing payments. If it includes the ongoing payment, the actual payment-according-to-the-loan should be paid monthly, as well as a portion of the arrears. Once the 13 was over, you'd go back to paying directly.

[bkfiler]

so you dont get to keep the house after paying back only a negotiated portion eh? i was wondering how that works.

to bad you can bk on the house and keep it

[Jman30]

thats what i would do toward the end.

regarding the mortage. im trying to learn more about chapt 13. your mortage is included in your bk payments i assume. how does all that get worked in. if you owe 200K on a home how does chapt 13 work that in?

Actually, I am glad you asked because I am expert in this matter - the mortgage being in the Chapter 13. When I first filed, the mortgage was NOT in my 13. They filed a claim to be included in the Chapter 13, because they said I was 1 month in arrears. Technically, I was not. The payment was due on Dec 1st and I sent it on Dec10th (within the grace period) but they filed the claim on the 10th as well.

So, to make this short, we included it. First, they include the arrears amount as a new secured claim. They also put your mortgage payment in the Chapter 13 payment. And the Trustee fee increases slightly because of the two new claims.

So my payment went from $550 per month, to $2275. That is because they included the one month arrears in the payment, plus the regular monthly mortgage payments of $1475.77 and the fee to the Trustee increased.

Right now, I am in the process of refinancing the home, just for the amount owed on the current loan, not to take any equity out of the house. I already have permission from the Trustee. My attorney is requesting a modification to the plan of having this new mortgage OUTSIDE of the Chapter 13, which will help my credit AND reduce my monthly payments down to the $550 level.

Does this help? I tend to be long-winded, so if this was too much information, let me know!