Is it OK to send half payment?

[TryingMyBest]

Until we can get our Chap 13 plan modified (due to reduction in husband's income) is it advisable that we send half payment ($1072.50 on a $2145 payment) now and the balance in 2 weeks on an already one month late BK payment? Or is that just asking for a reason to dismiss?

[aa06a47]

I would contact your attorney and find out what he/she says. However, given the past advice of hold your breath and hope the trustee doesn't find out doesn't give me much confidence in your attorney (from your previous thread). While I would personally hate to call the trustee for anything, if your attorney doesn't give you a very good answer, you can always call and ask them. The only problem is that it will bring to there attention that you have not paid. Good luck, and let us know what your lawyer say's Monday.

[TryingMyBest]

You're right, I believe I am losing confidence in our attorney as well. We will need to come up with an action plan either way. I desperately do not want our case dismissed for non-payment....timing is the issue, we can pay it but it will take another 2 weeks (until our next pay day). Some say to dip into savings but that would be fine and well if we had any (sad to say). We live in California and the cost of living is out of control. Thanks for your words of wisdom and my best to you in your own BK situation.

[aa06a47]

Of all the crap we go through in a Chapter 13 getting confirmed, the single biggest item after confirmation that can get the case thrown out is if we don't make the payments on time. Believe me, the trustee isn't the only one who watches if he is being paid. The creditors who are expecting that monthly check to come in from the trustee will also be watching....especially if they don't get there monthly check from the trustee.

I believe the trustee's (even the bad ones) know that situations come up from time to time and will probably work something out if it is a temporary thing, or getting your plan modified if it is long term issues. I believe the key is to make sure we work with the lawyer/trustee BEFORE they file motion to dismiss.

Just my opinion. I would go ahead and contact your attorney and if your situation looks long term, ask for the plan to be modified. If it is short term, he may tell you to call the trustee and work something out.

Good Luck, keep us informed.

AA

[TryingMyBest]

You're so right...all the crap we go through just to get it confirmed! Anyway, it is a temporary situation but jeesh...you would think they would have some empathy (I know, stretching here) but we didn't go the Chapter 7 route, which we could have easily done if one of us had quit our jobs prior. We chose Chapter 13 to pay our debts, the best way we knew how. Our payment is so steep, as I've mentioned, over $2K. I somtimes wonder if we didn't calculate our living expenses accordingly. But, what's done is done...and we're in it for the long haul, as you can relate, I'm sure. Thanks again, I appreciate your expertise.

[anonymuse]

I don't understand the whole converting a Ch 13 to a 7--but maybe someone can answer whether this is a possibility due to his job loss?

[TryingMyBest]

Great question, I wondered the same but thought it was not possible.

[aa06a47]

Yes, you can convert to a chapter 7 at anytime. You will still need to pass the means test I understand in order to convert. One of the issues is if you have alot of home equity or non-exempt assets. In one of your previous post you indicated you rented. So home equity should not be an issue.

If you can pass the means test, I would try and convert to a Chapter 7. The creditors have already gotten more in there 13 than they could expect to get in a chapter 7.

[keepmine]

I'd agree with AA.
If bk is in the cards, never pass up the opportunity to file a Chapter 7 as opposed to a 13.

[FoolAndHisMoney]

You're so right...all the crap we go through just to get it confirmed! Anyway, it is a temporary situation but jeesh...you would think they would have some empathy (I know, stretching here) but we didn't go the Chapter 7 route, which we could have easily done if one of us had quit our jobs prior. We chose Chapter 13 to pay our debts, the best way we knew how. Our payment is so steep, as I've mentioned, over $2K. I somtimes wonder if we didn't calculate our living expenses accordingly. But, what's done is done...and we're in it for the long haul, as you can relate, I'm sure. Thanks again, I appreciate your expertise.

With all the sad stories I read in this section of the forum the temporary unemployment, chapter 7 way seems more attractive unless you want to get caught up with mortgage or car arrears. In any 5 year period in my adult life something has always happened unexpectedly to throw me off course and borrowing has always solved it at least for the short term. 5 full years of no borrowing and no savings would kill me sooner or later. Even if I survived it would kill my marriage for sure.

[aa06a47]

With all the sad stories I read in this section of the forum the temporary unemployment, chapter 7 way seems more attractive unless you want to get caught up with mortgage or car arrears. In any 5 year period in my adult life something has always happened unexpectedly to throw me off course and borrowing has always solved it at least for the short term. 5 full years of no borrowing and no savings would kill me sooner or later. Even if I survived it would kill my marriage for sure.

Yeah, it isn't easy, and the emergency situations will come up. I am only 4 months into my chapter 13 now (3 payments), but I am better off today, at least at this point in time, than I have been in a long time. I haven't been able to do what I want, get everything I want, but so far, everything I have needed I have been able to get.

I have never quite understood the chapter 13 hell. After all, a Chapter 13 does "usually" provide some reimbursement to creditors. The chances for success would be much greater if they would allow some wiggle room in the plans for emergency situations.

[lrprn]

Yeah, it isn't easy, and the emergency situations will come up. I am only 4 months into my chapter 13 now (3 payments), but I am better off today, at least at this point in time, than I have been in a long time. I haven't been able to do what I want, get everything I want, but so far, everything I have needed I have been able to get.

I have never quite understood the chapter 13 hell. After all, a Chapter 13 does "usually" provide some reimbursement to creditors. The chances for success would be much greater if they would allow some wiggle room in the plans for emergency situations.

AMEN, aa!!! I will never understand how Congress thinks that our lives are going to freeze in time for three to five years with nothing whatsoever changing. Never gonna happen....that's why about 50% of Ch 13s ultimately fail. As a sure-fire way to ensure creditors receive something back as opposed to Ch 7, what a joke!

[anonymuse]

With all the sad stories I read in this section of the forum the temporary unemployment, chapter 7 way seems more attractive unless you want to get caught up with mortgage or car arrears. In any 5 year period in my adult life something has always happened unexpectedly to throw me off course and borrowing has always solved it at least for the short term. 5 full years of no borrowing and no savings would kill me sooner or later. Even if I survived it would kill my marriage for sure.

Unfortunately, temporary unemployment isn't always just a month or two. It can be a year or more. Or it's can be a serious paycut--in my case almost 40%. And then if you don't have health insurance and have any medical issues, watch out--it can all start spiraling. I was in no way living beyond my means before I was layed off--put a lot of money into 401K, stocks, and savings--no CC debt prior to that--paid it off in full every month except for maybe an xmas or two where I would take 2 months to pay (I spoil my niece and nephew terribly--ok that's one area I go overboard in, but only when I had the income to support it. Everyone tells me I'm the proudest Aunt they've ever seen.)

So many overviews about bankruptcy focus on passing the means test being a "free and clear path" to Chapter 7. But they forget to stress (a) whether you are in the arrears on home or car payments and want to keep them, and (b) whether you have any non-exempt equity.

[anonymuse]

AMEN, aa!!! I will never understand how Congress thinks that our lives are going to freeze in time for three to five years with nothing whatsoever changing. Never gonna happen....that's why about 50% of Ch 13s ultimately fail. As a sure-fire way to ensure creditors receive something back as opposed to Ch 7, what a joke!

There is probably some study that some economics or law student has done to determine the reasons for such a low success rate for Ch 13 plans. Obviously, we know in generalities that "sh!t happens" causing a decreased income, someone misses a payment, and then people are discharged. But what we need to know is how they tried to work it out with the trustee and where the breakdown is there--why isn't the system accomodating enough to protect the debtor AND the creditor for these situations? A sucessful Ch 13 is what the credit wants also!

Sorry I can't remember the posters name, but they said in their district the court makes 57 month plans to allow for those contingencies! That allows for bascially 3 "free" months worked into the plans for those who have a temporary setback (car problem, medical bills, etc). Plus it helps to keep cases out of the courts for people to revise plans which is costly for the courts.

I wish I knew where to start to lobby Congress for a change in the law. IMO, 36 month programs should be 33 month programs with 3 freebies; 48 month programs should be 44 month with 4 freebies; 60 month programs should be 55 month with 5 freebies. I'm a little pessimistic due to my bad luck (yes, my nickname is Black Cloud), but I'd count on 1 emergency a year. The creditors would get full amount, but a little more each month than they expected, but know that there could be lapses.

This would help everyone around for more successfully completed Ch 13s: no needless time spent having to revise plans for emergencies (for example, plan revisions would concentrate on cases where people lost their job and accepted something at a lower income)--this saves the courts, the lawyers, the creditors, and the debtors time, money, and stress.

[lrprn]

I'm in 100% agreement with you, Anon - see my comments in red inside your original post below...

There is probably some study that some economics or law student has done to determine the reasons for such a low success rate for Ch 13 plans.

There is - a huge study of bankruptcy in the U.S. was done by the non-partisan appointed National Bankruptcy Review Commission back in 1997. The section of the study about Chapter 13s (all 69 pages of it on one long scrolling page) is at http://govinfo.library.unt.edu/nbrc/.../08consum.html . Makes for *very* interesting reading.

Sorry I can't remember the posters name, but they said in their district the court makes 57 month plans to allow for those contingencies! That allows for basically 3 "free" months worked into the plans for those who have a temporary setback (car problem, medical bills, etc). Plus it helps to keep cases out of the courts for people to revise plans which is costly for the courts.

Actually that poster was me! Our Ch 13 plan is set for 57 months (although now with our new medical bills from my unexpected hospitalization right after we filed, our lawyer thinks we may have to go up to 60 months when we file our modified plan). All 3 "bye" months of used up within 12 days of filing....how depressing is that!

I wish I knew where to start to lobby Congress for a change in the law. IMO, 36 month programs should be 33 month programs with 3 freebies; 48 month programs should be 44 month with 4 freebies; 60 month programs should be 55 month with 5 freebies. I'm a little pessimistic due to my bad luck (yes, my nickname is Black Cloud), but I'd count on 1 emergency a year. The creditors would get full amount, but a little more each month than they expected, but know that there could be lapses.

You know there had to be these kinds of discussions going on behind closed doors for years before the creditors finally paid enough legal bribe money to enough of our legislators so the majority would compromise their own ethics and vote for something they KNEW from study after study and from the system's own bk lawyers and judges isn't fair to debtors and unfairly benefits creditors. As a citizen of this country, I'm expressing my feelings about what they did last year by not voting for any legislator who voted for the new BAPCPA bill. I'm also planning on attending our local and state political rallies to publicly question everyone potential office holder I can about this issue.Watch me roar!

This would help everyone around for more successfully completed Ch 13s: no needless time spent having to revise plans for emergencies (for example, plan revisions would concentrate on cases where people lost their job and accepted something at a lower income)--this saves the courts, the lawyers, the creditors, and the debtors time, money, and stress.