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    Question Initial payment plan too high

    First, I would like to say I am new to the forum - started reading when we were contemplating filing a couple of weeks ago and saw a lot of good advice
    I searched through the FAQs and topics and couldn't find a similar question.

    We filed on 5/17/2022 so first payment is due no later than 6/17/2022. We are chapter 13 with 100% payback. Our lawyer filed a proposed payment that is too high. He said not to worry about it as he thinks can be adjusted after all proof of claims are filed. He said final accounting of debts will be higher or lower than what we submitted - this makes sense as some additional interest would have accrued on our high interest personal loans, but overall list is too high. How realistic is it for the court and trustee to agree to a reduction six months into the plan? Or would our excess payments just lead to finishing the plan in less than 60 months?

    Here are items that make the planned payment too high:

    Our lawyer pulled a list of creditors, I think from credit reports and other sources. It matched pretty close to what I provided him, with the difference that four of the debts were duplicates - same debt but corporate mailing address versus local mailing list. Duplicates were about $10,000 in total.

    Second issue - even taking the inflated numbers, the payments are too high. Including the secured (mortage and cars in the payment plan) and unsecured debts, then applying the trustee 8% fee, our payments should be $5,331 per month. Our lawyer submitted a plan of $5,675 per month. $334 might not seem like a lot per month, but in the fall another child is off to college and we won't be able to take a parent plus loan, so every little bit will help cover tuition. Stripping out the trustee fee, this means paying an extra 19,000 over the plan. So would we be able to adjust the payments or would we be stuck with the higher payments, but plan would end about 12 months early-(large part of our plan are first and second mortgages - payments to unsecured are about 1,700 out of the 5,675.

    #2
    Are you sure that "in plan" Trustee fee is 8%? Even though the Trustee fee may be 6%, 7% or 8%, most districts still put 10% in the plan to cover any variation in the fee during the plan. I think that 2% difference can be the difference. Also the "Till Rate" is over 5% now, and likely close to 6% which can affect some of your calculations.

    If you were to pay more than you needed to pay over the 5-year term of the plan, then the plan would end early.

    You could press your attorney to get the payment reduced after the claims bar date has passed and hopefully before confirmation. Even if it's after confirmation, it could still be modified, but must go through the modification process. If you have significant income, I'm sure the Trustee and your attorney will just say "just keep paying and you'll just be done sooner." If that $330+ a month is significant to your budget, then I would push back.


    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

    Comment


      #3
      Thank you Justbroke for such a quick response.

      I don't think the till rate will change our payments much - except for the house where we are continuing normal mortgage payments, the only other secured as about 13,000 on two cars. Unless till rate also applies to credit card and personal loans, then that would explain a lot.

      On the trustee fee, the filed paperwork says up to 10%. The trustee's website said for 2021 he averaged a little over 6% but our lawyer said his fee has typically been 8% for 100% chapter 13 cases. But I can see where it makes sense to build 10% into the plan.

      Long term, the extra is no big deal - it is within our budget. Only hard part will be this fall when my daughter starts college out of state- we went through our cash reserves keeping up with the payments before filing and my wife's car needed new tires and brakes recently. We would be fine with a quicker payoff versus slightly smaller payments. However, if our estimate is right, debts in the plan are overstated by around 10,000 (of course we will know the full true amount after proofs of claim are filed). So, we might be looking at payments that are closer to $500 high ($10,000/60+$300 that I can't figure out from the numbers listed in the plan). However, I am sure the trustee and our lawyer have seen enough of these that before confirmation everything will be figured out.

      Comment


        #4
        Till rate may apply to your vehicles since they are technically "refinanced" in a Chapter 13 (over the term of the Chapter 13)... unless those care are very new with terms exceeding the life of the Chapter 13. (For example, just purchased cars a month before filing and the term on the vehicle loan is 72 months.)

        Like you, I believe that they'll figure it all out in the end. Once the claims period has closed, you should police the claims and determine what was not filed, and then ask your attorney to update your plan payment accordingly.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

        Comment


          #5
          Originally posted by justbroke View Post
          Till rate may apply to your vehicles since they are technically "refinanced" in a Chapter 13 (over the term of the Chapter 13)... unless those care are very new with terms exceeding the life of the Chapter 13. (For example, just purchased cars a month before filing and the term on the vehicle loan is 72 months.)

          Like you, I believe that they'll figure it all out in the end. Once the claims period has closed, you should police the claims and determine what was not filed, and then ask your attorney to update your plan payment accordingly.
          That is what we did but my payments ended up staying the same, just the amount of claims filed was much less and I'll finish in 36 mo. rather than 60.

          Comment


            #6
            Originally posted by womanonfire View Post

            That is what we did but my payments ended up staying the same, just the amount of claims filed was much less and I'll finish in 36 mo. rather than 60.
            It all sucks man but 36 months is alot better that 60... im at 44 months a well passed over this life sucking self induced sentenced but looks like my 100% plan will finish up about 9 months early and i for one cannot wait to see a paycheck without the deduction on it thats for damn sure

            Comment


              #7
              Originally posted by Vicmustaine View Post

              It all sucks man but 36 months is alot better that 60... im at 44 months a well passed over this life sucking self induced sentenced but looks like my 100% plan will finish up about 9 months early and i for one cannot wait to see a paycheck without the deduction on it thats for damn sure
              I am so lucky I avoided the paycheck deduction. Not even sure how I did that but I did!

              Comment


                #8
                Originally posted by Vicmustaine View Post

                It all sucks man but 36 months is alot better that 60... im at 44 months a well passed over this life sucking self induced sentenced but looks like my 100% plan will finish up about 9 months early and i for one cannot wait to see a paycheck without the deduction on it thats for damn sure
                I am with you! It looks like ours will end about 9 months early!! I am waiting for that "raise" in my paycheck! We are at month 50 right now, I think!
                I am not an expert. I just share my experiences in the Wonderful Wacky World of Chapter 13!

                Comment


                  #9
                  Congratulations on finishing early. Hope I end up there as well. When did you figure out it would end early? must have been a big relief especially with inflation the way it is now.

                  Comment


                    #10
                    Originally posted by notreallyme View Post
                    Congratulations on finishing early. Hope I end up there as well. When did you figure out it would end early? must have been a big relief especially with inflation the way it is now.
                    A while ago went on my NDC account added up all my remaining balances and divided it by my payment minus the trustees 7.5% deduction 🙄 and works out right about New Year’s Day … it truly be. Happy new year !!!

                    Comment


                      #11
                      Originally posted by Vicmustaine View Post

                      A while ago went on my NDC account added up all my remaining balances and divided it by my payment minus the trustees 7.5% deduction 🙄 and works out right about New Year’s Day … it truly be. Happy new year !!!
                      Great timing - large paycheck just in time to either have a nicer holiday or right after to pay off holiday bills. Enjoy the pay raise

                      Comment


                        #12
                        Our mortgage was paid off during BK and we still owe on HELOC. I received a copy of an order from the bank’s attorney and trustee (I forget what it’s called) that stated the mortgage was paid and HELOC was up to date. This order is filed near the end of BK. That’s when I realized we were finishing early. Then I looked on NDC and saw the amounts still owed to the creditors. We had a few that didn’t file so that’s the reason.
                        I am not an expert. I just share my experiences in the Wonderful Wacky World of Chapter 13!

                        Comment

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