Bankruptcy Law/Chapter 13 Question.
I am currently in month 15 of a 60 month confirmed Chapter 13 plan. As part of the plan, my second mortgage was classified as unsecured (I unfortunately purchased my home near the height of the real estate market in 2006, whereas, my 1st mortgage itself is still underwater). Iím thankful I have a shot of eliminating my unsecured second mortgage, however, Iím concerned about my ability to complete the 60 month plan (uncertainly with my current job) to receive the discharge. I have approximately $100K of unsecured debt as part of my Chapter 13 plan (roughly 50% credit cards and 50% the second mortgage). Iíve recently engaged the second mortgage company to offer a nominal amount to try to settle the second mortgage, which would help my situation in the event I canít complete my plan, and this debt becomes secured again. They currently havenít agreed to settle (I believe the amount I have the ability to offer is too low), but they did tell me if we come to an agreement, the court will have to approve this. My question is, (1) is that indeed true, and (2) do you think the trustee/judge would object since Iím only offering this amount to this one creditor (versus the numerous other unsecured creditors under my plan). For example, would there be an objection this is unfair, and any amount would have to split among all creditors? Please let me know and thank you.
Hello Glenn: In direct answer to your question, the court would have to approve a settlement and your concerns about only paying one unsecured creditor are justified. However, depending on facts you did not state in your question, you may be able to modify your plan and not pay anything more at all to any of the unsecured creditors - it just depends on the specific facts of your case. This is Sunday night. If you would like to call me in the morning to ask me about this further, I could explain to you on the phone in more detail - and we could look up your case on the computer to see what you are facing. I will not charge you just to talk on the phone. You can call me at this number:
Jack Hall, J.D.
Hall Bankruptcy Services
I look forward to hearing from you.