Debtor Math

By Helen M. Morris, Chapter 13 Trustee, Northern and Southern Districts of West Virginia

debtormathDebtor math baffles me.   I work base 10 daily; I am even competent in base 6 and can do binary.  But I just can’t get the hang of debtor math.

For example, in a motion filed by an experienced debtor attorney:

“The debtors request permission to settle with the insurance carrier for $7,974 and to use $8,995 of the proceeds to purchase a replacement vehicle.” (No, the figures weren’t transposed.  The insurance settlement was $7,974.00.)

In an order drafted by the same attorney with respect to the treatment of a Special Class unsecured claim:

“[Creditor’s] claim will be kept at $188.71 times 28 months or $4,975.88.”  Of course, $188.71 times 28 is $5,283.88.   Every staffer who handled that order came to me with a question—is the claim to be paid at $188.71 for 28 months or a total of $4,975.88?  I raised the issue at confirmation and the answer from the Court was that the creditor was to be paid $4,975.88 at the rate of $188.71 for as many months as necessary.

That same attorney filed a motion to modify a confirmed plan (He always calls it amending the plan, but that’s another story.) in which he wanted to extend the plan from 36 months to 60 months and add the mortgage to be paid through the trustee.  I had no problem with the concept, but with his math.  (DUH!)  I filed a response that stated that the modified plan payments needed to be $1,290.00 for the remaining 39 months if the plan were extended.   At the hearing, he persuaded the Judge to extend the plan to 47 months and set the plan payments at $1,070.00 for the remaining period.  The plan is now short the sum of $8,013.02.  Trustee’s motion for reconsideration has been filed.

One expects math problems with pro se debtors, and one of my classic cases was filed by an infrequent Chapter 13 filer–now a debtor himself, pro se, of course.  (I guess the good news/bad news  for his clients is that he isn’t doing  a better job with his own case than he does on theirs.)

Monthly disposable income is $126.81.  Plan payments are $361.10 per month for 60 months.  Two mortgages are to be paid through the plan.  One mortgage has monthly payments of $838.15 per month and a pre-petition arrearage of $6,091.81.   The second mortgage has monthly payments of $457.38 per month.

It’s only short about $74,000.00—and that’s just to pay administrative and secured claims.  There are $86,524.00 in unsecured claims.

Are there coupons I’m supposed to be using to stretch the debtor dollar?

Of course, the creditors aren’t always on top of the calculator either.  In a recent case, the system showed that there was a balance on the pre-petition arrearage unpaid as well as a post-petition arrearage.  (We are a conduit jurisdiction now, but weren’t at the time the case was filed.  The ongoing mortgage payments were added post-confirmation in resolution of a motion for stay relief.)  Two letters to the debtors and their counsel providing documentation (proof of claim filed by the creditor and a copy of order setting the post-petition arrearage as well as payment history to the affected creditor on the pre-petition, post-petition and on-going payments through my office) brought a fax to me from the creditor which simply stated that the debtors are current on the mortgage.

I responded to the creditor with a letter pointing out that I showed there were balances due on the arrearage claims and I could not use a fax to “correct” my numbers.  The creditor’s attorney called my office and told the staffer who answered the phone that other trustees file a Notice of Final Cure and the creditor will respond to that.  He didn’t understand why I couldn’t do that.  Never mind that I had previously talked to the attorney and explained that I was still showing balances due—thus, I couldn’t file a pleading with the Court stating that the arrearages were cured.  It took two more phone calls before the creditor finally filed something with the Court.

The same creditor, however, in a case in which I was showing the debtor current and the default cured, filed a response that the debtor wasn’t current and indicated an amount due which didn’t correspond with anything of record.  I filed a Reply.  Subsequently, my office received a phone call from a bank employee saying that my reply was correct and they weren’t going to attend the hearing.

My office manager is growing concerned.  She has her mortgage with that bank.


2013-01-26 16.11.10-1Helen M. Morris has been the Chapter 13 trustee for the Northern and Southern Districts of West Virginia since October 1, 1996. Prior to her appointment, she was in private practice in Huntington, WV, where she served as a Chapter 7 panel trustee in addition to representing both debtors and creditors in bankruptcy matters; but not in the same case. She has a Bachelor’s degree from Marshall University in Huntington, WV, and her law degree from Vanderbilt University School of Law in Nashville, TN.

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