How long does chapter 13 take? -- Loan #1089 -- 2 years now

[Fred93]

Prosper's web site says Loan #1089 borrower filed Ch13 bk on 11/06/2006.

Most recent payment was Sept 30, 2006.   Prosper still has the loan in the "4+ late" category.

I don't understand the timeline of bk very well.  Some time is used up by the legal process, wit the lawyers filing paperwork, and hearings and so forth.  Then, for ch13, there may be a "plan" where money is handled by a trustee or something, and there are partial payments.  Right?

But on this loan it has been two damn years, and there are no payments of any kind.  Kinda makes you think that something is wrong.  Perhaps the claim that there was a bankruptcy filing is in error, or fraudulent.  Perhaps this was actually discharged, and Prosper never processed the discharge.  Lenders have no way to check, as we don't know the name of the borrower.

Two years is absurd, right?

[112233]

my guess:

prosper got a notice in the mail, perhaps scribbled on a napkin, that the borrower filed or is going to file bankruptcy. once they received the notice, they promptly did nothing for 2 years.

[bamalucky]

Nominate for the lobby

[Cushie]

I don't know how long a thirteen lasts but to have the last payment be two years ago suggests to me that this person is no longer in BK - he most likely wasn't discharged, either.  A trustee would never allow someone not to pay for more than one month, with permission. 

[bamalucky]

Between 20 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. If the U.S. trustee or bankruptcy administrator schedules the meeting at a place that does not have regular U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the debtor files.

In a chapter 13 case, to participate in distributions from the bankruptcy estate, unsecured creditors must file their claims with the court within 90 days after the first date set for the meeting of creditors.

The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under chapter 7.

Within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court, the debtor must start making plan payments to the trustee.

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html#work

[Xenon481]

Unbelievable.  Perfectly believable considering the amount of incompetency we have seen from Prosper.  I propose that Prosper should fully repurchase this loan for (the likely) failure to have even asked to be included in the distributions.

[ira01]

Unbelievable.  Perfectly believable considering the amount of incompetency we have seen from Prosper.  I propose that Prosper should fully repurchase this loan for (the likely) failure to have even asked to be included in the distributions.

It seems highly likely to me that Prosper either failed to file a proof of claim (and thus lost out on receiving Plan payments), or there was no BK actually filed, or the BK was dismissed or was converted to a Chapter 7 (which sometimes happens).  In the first two cases, Prosper should repurchase the loan for its negligence, and in the third case Prosper should have restarted collections and then sold the loan at the next debt sale (and should pay the lenders what they would have received at that sale).  Only in the fourth case would Prosper probably not owe the lenders money, although it certainly should have defaulted the loan, thereby allowing lenders to write it off on their taxes.  In any event, there is certainly something wrong here.

[Hedgemaster]

Here's another one:  PhotoBug...#1355, filed Chapter 13 BK November 2006, last payment 9/06, not counting a community payment.

I have no doubt that PhotoBug filed BK, I just don't think Prosper ever bothered to follow up.

[HollowOak]

Email I just sent to Prosper:

Status of loans in bankruptcy.

I have 3 loans in ch 13 bankruptcy status.
Loan 7123, filed  Sept 6 2007.
Loan 6808, filed  March 6, 2008
Loan 6471, filed Sept 7, 2007

Chapter 13 bankruptcy provide for a restructured payment plan to creditors over a period of 3-5 years by the trustee.

Not one of these loans has made any payments.

Such repayments are to commence soon after the BK petition has been approved:  http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

Can you tell me why it is that no payments have been made on any of these loans?

Perhaps we should compile a list of all loans known to be in Ch 13 BK. I'm pretty sure that if push comes to shove, it would be low-hanging fruit to investigate all the Ch 13 BKs and see what (if anything) Prosper filed with the courts to ensure that lenders get their share of the repayments.

I'm pretty sure that Prosper's fiduciary duties will be construed to extend to making the correct filings to protect the lenders' interests in such proceedings.

At the same time, it is worth noting that I recently received notice from Prosper that a Ch7 BK has been discharged. This was for loan 8367 (listing 103817).

This was filed on (according to Prosper's documents) Apr-04-2008, and the bankruptcy was discharged on Jul-08-2008, indicating what I would assume to be normal, a 3-4 month process.

[regeneration]

Here is one that made only 2 payments and then promptly declared Chapter 13 (or so we are told) almost a year ago.

http://www.ericscc.com/listings/124710

If Prosper was following the correct procedures, we should have seen payments on this, especially considering how soon before BK the loan was taken out.

[cubbiesnextyr]

http://www.ericscc.com/listings/110194

This one is listed as a Ch. 13 that filed on 2/29/08, so it hits 6 months tomorrow. 

ETA: Per Prosper's Bankruptcy Policy:

With payment plans that do call for amounts to be paid toward unsecured debts, monthly plan payments will not begin for over 6 to 12 months from the date the bankruptcy is filed. Prosper will forward any monthly amounts received under payment plans to the Prosper lenders.

So perhaps we're expecting things too quickly?

[Nora_Lenderbee]

Didn't Mr Deluxe say he was filing Ch. 13?

http://www.ericscc.com/listings/85382

[HollowOak]

Didn't Mr Deluxe say he was filing Ch. 13?

http://www.ericscc.com/listings/85382

Mr Deluxe is loan 6808  in my note to Prosper.

[Xenon481]

Chapter 13 Filed (supposedly) on Jan-17-2007 and not a single structured repayment since (Thus, 19 months with no activity):

http://www.prosper.com/lend/listing.aspx?listingID=35390

http://www.ericscc.com/listings/35390

[animalhouse]

Per Prosper, Chapter 13 Filed 10/30/07, yet to recieve a payment

http://www.ericscc.com/listings/132593