Do I need to include my secured debt in chapter 13? 12 Answers as of August 08, 2011

I was told today by an attorney I had consulted in CA that I will be needing to include my car payment of $750 per mos to my ch 13 plan in order for a 2nd lien strip to be possible. My car will be paid off in a year and I don't want to start from scratch and pay it in 5yrs again(even if it is lower). Besides, it is more flexible not to include this in the plan. Also, I worry about implication of car title under bankruptcy plan.

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Law Office of Asaph Abrams
Law Office of Asaph Abrams | Asaph Abrams
There are several issues here, but a salient point is that if one pays off a $750/mo. car-loan one-year into a plan (of say 5-years length), then that may free up an additional $750 that the trustee would expect to be poured into the chapter 13 coffers for the duration of the plan. This answer (as well as our Web site) doesn't address all facts & implications of the question; it's general info, not legal advice to be relied upon; it creates no attorney-client relationship; it may be pertinent to CA only; it's independent of other answers. Hire legal counsel before acting or refraining from bankruptcy/legal action.
Answer Applies to: California
Replied: 8/8/2011
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
YES
Answer Applies to: California
Replied: 8/8/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
It is possible to not include a secured debt such as an automobile in the plan payment. The debt can be a direct pay. Sometimes, for cash flow purposes, it is better to include the debt in the plan even if a direct payment would pay it off quicker. Consult your attorney to explain the effect of both ways in your case.
Answer Applies to: California
Replied: 8/8/2011
Lake Forest Bankruptcy
Lake Forest Bankruptcy | Anerio V. Altman, Esq.
Your plan may require, or your attorney may intend, to perform what is known as a "cramdown" on your vehicle. Basically, they are going to pay the remainder of the debt on the car through the plan itself. Chapter 13 Law often requires such an adjustment if it results in a larger return to the unsecured creditors. Often, you cannot pick and choose what costs are included into a Chapter 13 plan.
Answer Applies to: California
Replied: 8/7/2011
Grasso Law Group
Grasso Law Group | Charles Grasso, Esq.
If your secured debt (car loan) is due to finish before your plan period then you have to include the car payment in the plan. The reason is that the creditor for your car cannot have higher priority in receiving their payments, which would happen if you paid them off in year.
Answer Applies to: California
Replied: 8/7/2011
    Kalra Law Firm
    Kalra Law Firm | Madhu Kalra
    If you file chapter 13, you would need to disclose all your assets and all your debts. List all your income and expenses. If your budget allows, you can pay your car payment directly outside the plan until paid off. It all depends upon your income, expenses and how much you need to pay in the plan. If your budget is sufficient, you could pay your car payment directly until paid off and increase your plan payment after car payments are done. You can discuss it with your counsel, who is setting up your chapter 13 plan.
    Answer Applies to: California
    Replied: 8/7/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    The lawyer is correct. You must include all of your debt in the Ch13 plan. You can pay it out side the plan, (at least we can in the Central District). If the payment is too big and it tanks the plan the lawyer is correct that spreading the payment out of the life of the plan is necessary. You will get the title when it is paid off.
    Answer Applies to: California
    Replied: 8/7/2011
    Michie Law Firm
    Michie Law Firm | Douglas Michie
    You must list car & lender. You can reaffirm debt. You can put in plan to pay off in 1 year per terms of reaffirmed note.
    Answer Applies to: California
    Replied: 8/6/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Some trustees require that all secured debts be paid through the Plan and not directly. If that is what the Trustee wants then it is not much to ask to allow you to wipe out the second lien on your home. A small price to pay for such a great deal! You need to look at the total picture (the forest and not the trees).
    Answer Applies to: California
    Replied: 8/6/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    If you want the benefit of a lien strip, you will have to do what is required under the law, which is what the attorney is telling you is required. If it doesn't work for you, then don't file and pay the second Deed of Trust lien. Depending on what other secured and unsecured debts are in the plan, you will not necessarily be paying for 5 years on the car.
    Answer Applies to: California
    Replied: 8/6/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    A chapter 13 payment is wholly or partially based on your current income and expenses. If you file a chapter 13 and your current expenses include your car payment that matures in 1 year your plan payment will increase after your car is paid off. The best way to deal with this is to pay the balance on the car evenly over the full length of the plan. The trustee will require you to do this and in the long run your plan payment will be less.
    Answer Applies to: California
    Replied: 8/6/2011
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