We provide Chapter 13 bankruptcy services. Find out if you qualify for a Chapter 13 and stop foreclosure. The information on this page will help you determine whether filing a Chapter 13 is your best option. Contact us for a free consultation.
- The difference between a Chapter 7 and a Chapter 13 bankruptcy
- Who can file for Chapter 13?
- What should know and do when you are filing a Chapter 13?
- You must retain copies of all your mortgage payments
- Will creditors go after the cosigner in a Chapter 13?
- After Chapter 13, and before the confirmation of your plan, am I required to make payments on the car loan?
- What about judgment liens in a Chapter 13?
- Can you refinance a Chapter 13?
- Can I purchase a car while I’m in Chapter 13?
- Can you use credit cards while in Chapter 13?
- Can you reduce your mortgage payments in a Chapter 13?
- Can you get rid of a mortgage in a Chapter 13?
- What happens if I become hospitalized or lose my job while in a Chapter 13?
- What is a 0% Chapter 13 plan?
- If you have filed a Chapter 7 and received a discharge 1 week ago, can you file a Chapter 13?
- How many times do you go to court for a Chapter 13?
- What documents are need for a Chapter 13?
- When and where is the confirmation hearing held?
- What happens at the confirmation hearing?
- What are proofs of claim?
- Must you obtain a Certificate of Education to obtain a Chapter 13 discharge
- Can file another Chapter 13 after your case was dismissed?
- How long does a Chapter 13 last?
- Why must you budget in a Chapter 13?
- What are the fees and costs of a Chapter 13?
The difference between a Chapter 7 and a Chapter 13 bankruptcy
- both chapters are very similar
- both have identical schedules
- both require all debts and loans to be disclosed
- in Chapter 13 you disclose whether you have excess income in order to pay the current month’s mortgage
- Chapter 13 has a document entitled The Chapter 13 plan
- Chapter 13 can be used to reduce loan payments and tax payments
Plus & Minues of Chapter 13 Bankruptcy
Also known as Chapter 13 – Debt Reorganization
|Stop Foreclosure and save home
|3–5 Year Debt Management Plan
|Stop Repossession of Car
|Possible to eliminate 2nd mortgage
|Public Disclosure of Information
|Possible to reduce monthly car payment
|Multiple Court appearances—at least 2
|Automatic Stay against creditors and lawsuits
|No Discharge of Debts for 3–5 years
|Possible to repay credit card debt with no interest
|Might have to repay credit card debt with interest
|Possible to repay as little as 10% of credit card debt and no interest
|Possibly might have to repay 100% of credit card debt + interest
|Possible to repay tax debt without interest
|If case is dismissed, all taxes could still be due plus accumulated interest
|No spending money on luxury goods and services
|No spending money on luxury goods and services
|If self-employed, you have to make all payments to Chapter 13 Trustee
|Court ordered wage withholding if you are an employee, once Debt Management Plan is confirmed.
|Chapter 13 Trustee can monitor your finances and tax refunds and claim tax refunds
|Can spread mortgage arrearage over a 5 year period.
|Trustee can insist on making mortgage arrearage payments over 3 year period
|Possibly can reduce car payment and use the savings to pay on mortgage arrearage
|Could stretch out for a longer period of time your car payments
|Can handle debt in ways a Chapter 7 can’t handle the debt.
|More expensive than Chapter 7
|Considerable documentation is required for all of your finances
A Chapter 7 bankruptcy and a Chapter 13 petition are very similar. Both a 7 and 13 petition have Schedules which are identical, namely, you have to list in the same official format all of your priority debts which are basically taxes and alimony and child support debts.
This is found in Schedule E. In Schedule D, for both petitions, you list all of your secured debts which are car loans, mortgages, pension loans, and judgment liens. In Schedule F, you list all of your unsecured debts such as credit card debt, personal loans, medical bills, for both a 7 and 13.
You have to list your income in Schedule I and Expenses in Schedule J. These Schedules are exactly the same except that in a Chapter 13 at the bottom of Schedule J, it provides information as to whether or not you have excess income for the month in order to pay on your mortgage and what will be your monthly payment in the Chapter 13 Plan.
The Statement of Financial Affairs Schedule is the same in both Chapter 13 and Chapter7.
The major difference between a Chapter 13 petition and a Chapter 7 petition is that the Chapter 13 has an additional document called, ‘The Chapter 13 Plan’.
This is a separate document and outlines how you intend to repay on your mortgage which is in foreclosure. Please note that you can use a Chapter 13 for purposes other than just a foreclosure on a mortgage but this is the primary reason for its use.
It can be used to pay-off a car loan and even reduce those car payments if the car loan is over 2 years old and the value of the car is less than the debt. It can be used to pay-off just taxes and those taxes can be paid off without interest running on the debt (at least this was the case prior to BAPCPA) and I have seen this done post-BAPCPA.
But paying off just taxes versus using a OIC (Offer In Compromise) with the IRS is really a very specialized filing of Chapter 13 and it outside the area of this discussion.
And whether or not interest will have to be paid on the taxes is, also, really outside the area of this discussion. Suffice it to be said that the Trustee might not agree that no interest runs on a tax debt.
One last point in comparing a 13 with a 7 is with the Claim for Exemptions. On Schedules A and B of both petitions, you must list all of your real property and personal property. On Schedule C, you must claim your exemptions. Both 7 and 13 Schedules A and B and C are identical.
But in Chapter 13, if you don’t have enough exemptions to ‘exempt out’ your assets, then those assets which aren’t exempt must be repaid in the Chapter 13 in order to keep those assets.
This is called the ‘Chapter 7 Liquidation Analysis’. In order to have the Court confirm your Chapter 13 Plan, there are several tests which it must pass and one of these tests is called, ‘The Chapter 7 Liquidation Analysis’ which means that the creditors have to receive at least the same amount that they would have received if you had filed a Chapter 7.
Therefore, if you have assets which aren’t exempt, then in order to keep those assets and not have them subject to liquidation, you must include the value of those assets as part of your Chapter 13 Plan.
The consequence will be that your monthly payment will be increased. Now you should know that in most Chapter 13 cases as in most Chapter 7 cases, most of your personal assets will be exempt from the creditors and, therefore, this usually doesn’t cause an increase in your monthly payment and you usually aren’t forced to liquid assets in favor of the creditors.
But this issue exists and the proper claim for exemptions in your schedules by an experienced attorney is invaluable.
Who can file for Chapter 13?
- a consumer/individual with regular income
- a corporate or partnership cannot file Chapter 13
- a homeowner potentially losing their home due to a mortgage non-payment
Only a consumer or an individual with regular income can file for Chapter 13. A corporation or partnership cannot file for a Chapter 13. There are debt limits to a Chapter 13, namely, your non-contingent, liquidated and secured debt can be no more than $922,975.00 and your non-contingent, liquidated and unsecured debt can be no more than $307,675.00.
You can file a Chapter 13 to save your home if you have regular income from any source. You can have unemployment income, alimony, child support, pension income, disability income, social security income, business income, rental income and , of course, wages.
The essential ingredient is that the source of income be on a ‘regular basis’. Otherwise, if you don’t have a regular source of income, your Chapter 13 Plan will be ruled to be not feasible because you won’t be able to make monthly payments to your creditors in order to save your home.
Please note that I constantly repeat here the main reason consumers use Chapter 13 which is the saving of a home from foreclosure. In my unofficial and unscientific poll, at least 90% of all Chapter 13 petitions in the bankruptcy courts I practice in, I find that the Chapter 13 is used when a home is in foreclosure. The percentage could actually reach 99% but I want to be conservative in my observations.
I haven’t yet had a homeowner with a million dollar mortgage, but if you owed more than a million dollars on your home, I don’t know of a tactic to shoehorn you into a Chapter 13 if you were default on your mortgage.
This would definitely be an issue that would cause a Chapter 13 Trustee to consider bringing a Motion to Dismiss your Chapter 13 case if you owed more than $922,975 on a mortgage and all other secured debt combined.
What should know and do when you are filing a Chapter 13?
- when saving your home, you have to start paying on your mortgage again
- you have to know when your monthly payment is due
When you file a Chapter 13 to save your home, here’s some very important information about your obligations and responsibilities.
First, you have to start paying on your mortgage(s) again. Now in the planning of a 13, you first have to know when according to the terms of your Promissory Note and Mortgage your monthly payment is due. Many clients tell me that there payment isn’t due until the 15th of the month.
But you have to be very careful here because what you can be thinking is that you have until the 15th of the month to pay your mortgage payment because you are so use to paying it late and incurring late fees.
I force clients to read with me a copy of their promissory note and mortgage and in those documents it clearly states when the mortgage is due.
As soon as you file your Chapter 13 petition, you must make your first mortgage payment. Now let’s say after reviewing your loan documents that your mortgage payment is due on the First Day of the Month.
If you file your Chapter 13 Petition on January 25, then in 5 days you must send your first payment to the mortgage company.
But if you file your Chapter 13 Petition on February 2, then your First Mortgage payment isn’t due until March 1. This extra time can give you some breathing room and an opportunity to have a small cushion (being careful to exempt this cushion in Schedule C).
Clients who have a small and modest cushion going into the Chapter 13 usually fair better than the clients who have no cushion.
Once your Chapter 13 Plan is confirmed, Murphy’s Law takes over. If your home furnace is going to need replacement, it will be in the first winter after your plan is confirmed.
If you car will need a new water pump, it will be in the first 6 months after your plan is confirmed, etc. Having that cushion can be a life saver.
You must retain copies of all your mortgage payments
Many times when you send your first mortgage payment into the mortgage company, they will reject the payment and mail it back to you. I always ask my clients what they do they think they should do when the mortgage payment is sent back to them.
99% of my clients have good common sense and answer: call your office, which is correct.
Of they’ll say, ‘Well, I’d leave it in the bank and call your office’ (which is again a very good and common sense approach) then my office will straighten out the problem usually by calling the law firm which is representing the mortgage company in either bankruptcy or foreclosure, and we make arrangements for sending the money again.
I then ask my clients, ‘In the past, what did a few of my clients do with the return money since I didn’t discuss this issue with them.’ And many clients instantly guess that the client spent the money.
And then I ask my clients, ‘and where did they spend the money?’ Some clients are astute enough to guess on the first try that a few clients took the mortgage money which was returned to them and went to the casino and gambled it. I assure you that I am not exaggerating.
I have developed a cardinal rule in filing a Chapter 13: do not take your mortgage payment to the casino! I even had clients try to fault me because I didn’t tell them not to take any returned mortgage payment to the casino.
The next issue is making your Chapter 13 Trustee payment under your plan. In our jurisdiction in Connecticut, clients have to mail their payments to a lock-box in Tennessee, and the Plan Payment has to be made within 30 days of filing the Chapter 13 petition and plan.
But I tell clients that they should make their plan payments every 25 days after the plan is filed. because you have to allow for mailing and posting of the payment. It’s very, very important to make your Chapter 13 Plan payments on time.
Further, there’s the requirement that the Plan Payments be in the form of a bank check or money order.
The havoc which can be created by a bounced check is formidable – no bounced checks! Only send money orders or Bank checks to the Trustee’s lock box.
Also, you must keep copies of your payments to the trustee, and we need to be able to send the copies of the money orders and/or bank checks to the trustee’s office.
I tell clients that in order to get their Chapter 13 Plan confirmed they must make their mortgage payments on-time and this puts them on first base, and then when they make their Trustee Plan payment ahead of time (within 25 days of filing and with a money order or bank check) they are on second base; and in order to get onto third base, every month they have to send in their mortgage payment and Trustee Plan Payment. At this point you would be ready to come home to the Confirmation.
There’s also a requirement by the court and Chapter 13 Trustee which is written in stone that if you are regularly employed, the Court upon Confirmation of your Chapter 13 Plan will order a wage deduction to come out of your pay.
A few clients cannot abide by this requirement because their employer will know, and if they work in a small company, everyone will know their business even though this information is not to be shared by anyone.
If you can’t abide by the Court’s order that your payments to the Trustee will come via a wage deduction ordered by the Court, then you can’t file a Chapter 13.
If your monthly payment in the Chapter 13 Plan would be $400.00 monthly and you are paid bi-weekly, then the Court will order that $184.62 be deducted every payday and sent to the Trustee.
If you are self-employed, there can be no practical wage order and the Court and Trustee (and your attorney) will admonish you on the importance of fulfilling your obligations by continuing to send your payments to the Trustee after Confirmation.
Will creditors go after the cosigner in a Chapter 13?
The answer to this question depends on how your structure your Chapter 13 Plan.
Let’s take an example of a car loan. Your mother has co-signed on the car loan and you file a Chapter 13 Petition.
If you put into the plan that you are going to pay-off the loan in full or 100%, then a Creditor will not be able to get Relief from Stay in order to go after your mother.
But let’s suppose one or two other options. One, you cram-down on the debt.
The car loan is over 2 years old and the debt on the car is greater than the value.
If you cram-down on the car, the financing will look like this:
|Market Value of Car
|Debt on Car
|$18,000.00 @ 8%
|After Cram-Down Fair
|Fair Market Value of Car
|Debt on Car
|$10,000.00 @ 8%
|Payment through Chapter 13 Plan
Only in a Chapter 13 can you do a ‘cram-down’ where the Court can rule on the value of the car and if the value is only $10,000, then you can re-pay $10,000 @8% (or whatever was the contract interest rate) over a 5 year period.
The advantage to this approach is that you could reduce your car payment in this example by $162.00 per month and that might be enough to pay on your mortgage arrearage.
Chapter 13 is really, ‘budget, budget, budget’ and where are we going to get the money to pay on missed mortgage payments when the family budget is stretched so thin.
But I still haven’t really answered the question, what happens when there’s a co-signer on the debt. This makes the Chapter 13 Plan more complicated and difficult.
If you cram-down on a car loan (assuming you can under the new Bankruptcy Code) and someone has co-signed on the loan, then the creditor can go after the co-signer for the difference.
Usually, a family member has co-signed on this loan and even though you could cram-down on it, most of the time this option is taken off the table because of moral considerations because to cram-down on the car will cause problems for mother or whomever co-signed on the loan.
But the cram-down is a very important power for the consumer in bankruptcy in trying to save your home but again, our Corporate President has curtailed or reduced this option by requiring that the car loan be over 2 years old before you can do a cram-down.
Having a co-debtor on the loan complicates the issue because most of the time, you will ‘grin and bear it’ rather than cause a co-borrower economic hardship.
After Chapter 13, and before the confirmation of your plan, am I required to make payments on the car loan?
Now let’s say that you are going to use a car cram-down or you are going to put your entire car loan and pay that off in the Chapter 13. Why would you pay off a car loan in a Chapter 13.
Let’s say that you owe $5,000 on your car and your car payment is $350 per month, it’s possible to reduce that payment to $100 per month.
By reducing this car payment, you free money from your budget to help you pay on your mortgage arrearage.
When you make payments to the car finance company prior to your confirmation, this is called ‘adequate protection’ payments.
It is imperative to keep records and copies of all your payments. The importance of keeping of records of all your payments cannot be overstated.
The trustee can and will demand to see proof that you have been making adequate protection payments on your car loan.
This is another of the latest requirements under the new bankruptcy code.
What about judgment liens in a Chapter 13?
As in a Chapter 7, judgment liens can be avoided through a Chapter 13, usually by filing what is called a 522(f) Motion to Avoid Liens.
Let’s say that a creditor such as a credit card company or medical provider has a judgment lien on your home. It’s important that such be avoided in bankruptcy because remember: liens pass through bankruptcy unless specially acted upon.
If these liens aren’t addressed in the Chapter 13, they will be waiting for you at the end of your 5 year program. I always bring a 522(f) motion against this liens unless there’s some special reason why this shouldn’t be done.
Now the secured judgment lien become an unsecured debt in your Chapter 13 Plan and sometimes if you have to do what’s called a 100% Plan (you are going to pay 100% to your unsecured creditors in your Chapter 13 Plan) then it’s still worthwhile bringing the 522(f) motion because you might not have to pay interest on this debt and when you complete the Chapter 13 Plan, you are in a better legal position to have the lien removed because you have a Court Order which you can record on the Land Records.
Granted, the creditor has to give you a release but sometimes obtaining the release is difficult when the debt has been sold to numerous companies.
Can you refinance a Chapter 13?
At one time, there was no refinancing out of a Chapter 13. Lenders just were not lending to consumers who filed a Chapter 13.
Today, I tell clients the following: based on the current financing available and what is happening today in Chapter 13, you can refinance out of 13 if you meet criteria as follows:
- You have to make 12 monthly payments on your mortgage on-time. I cannot over-emphasize the importance of making your mortgage payment ON-TIME. Paying within the grace period does not constitute paying ON-TIME. The months before your Chapter 13 is confirmed and you are making your mortgage payments count toward this goal of 12 months of on-time payments
- You have to have sufficient equity in your property to refinance
- You have to have sufficient income to refinance. You have to have a job or a regular source of income
- The Trustee and the Court have to approve of your re-financing unless you withdraw your Chapter 13 and then re-finance but this strategy involves risks. Namely, you’ll be outside the protection of the Automatic Stay and protection of the bankruptcy court but on the other hand, you might save considerable money handling the creditors yourself. There are pro’s and con’s for refinancing in or out of the 13
- And finally and just as important as the above 1-4, the interest rate, points and prepayment penalties should be acceptable to you. In other words, you have to look at the terms and conditions of financing to determine if you weren’t in a 13, would they be acceptable to you. We would have to discuss your refinancing terms and conditions and what is the best strategy for you in re-financing
Can I purchase a car while I’m in Chapter 13?
- usually you would need to file a Motion to Incur New Debt
- the Trustee will require your latest pay stubs
- the Trustee will require your tax returns
- a copy of the proposed contact to purchase the car is required
- your latest I and J Schedules will be required
Many times your car gives-up the ghost when you’re in a Chapter 13. How are you to handle this situation? You have to file a Motion to Incur New Debt with the Court.
The Trustee usually will want to see your latest pay stubs and tax returns, and a copy of the proposed contact to purchase the car and your latest I and J Schedules (Income and Expense). In effect, if your Chapter 13 Plan hasn’t just recently been confirmed, you might have to amend your whole plan if you have had an increase in your income.
Now, there are many Motions to Incur New Debtor filed with the Chapter 13 Trustee and for the most part these motions are approved provided you can proof that the incursion of new debt will not prejudice your creditors.
Can you use credit cards while in Chapter 13?
- you can’t use credit cards during a Chapter 13
- you cannot incur new debts under Chapter 13
- to use credit cards you must obtain permission from the Trustee
- you must present your proposal to the court for approval
The simple answer is: No. You can’t use credit cards during a Chapter 13 or incur new debt without first obtaining the approval of the Chapter 13 Trustee who will first want to present your proposal to the Court for final approval.
Can you reduce your mortgage payments in a Chapter 13?
- the monthly payments are dependent on the terms of your promissory note
- these terms can’t be change unless you can prove there was a fraud committed in the promissory note
- proving fraud is very difficult to do
Again, the simple is: No. Your monthly payment is dependent on the terms and conditions of your promissory note and this can’t be changed in bankruptcy unless you can allege and prove that there was fraud in the making of the promissory note. This is extremely difficult to prove.
Can you get rid of a mortgage in a Chapter 13?
- you would have to allege and prove that the real estate had no value or a negative value in a 506 Motion
- it is possible in a real property that has a substantial environmental issue such as lead paint contamination, incurable radon, gasoline under the land
- the Court have to declare that the property has no value
I have counseled clients that if they abandon the property and the mortgage company refuses to foreclose on the property, then the property will remain in the client’s name and he/she will be responsible for the property taxes.
Some times only a Chapter 13 can turn this ‘lemon into a lemonade’ by having the Court declare that the property has no value and if you can own the property with no mortgage, perhaps the economics of the real estate market will make sense to try to re-mediate the property.
But let’s look at the usual situation where you have 2 mortgages on your home. Your home is worth $150,000 and you have 2 mortgages on the property.
The first mortgage balance is $150,000 and the Second Mortgage has a balance of $35,000. It’s possible to ask the Court through a 506 Motion to find that the Second Mortgage is unsecured and; therefore, in the Chapter 13 you wouldn’t have to pay on this mortgage because you have to pay on priority debt and secured debt but not on unsecured debt – (assuming that you what is called a ‘0’% Plan).
But if there’s one dollar of equity for the Second Mortgage, you can’t get rid of the Second Mortgage in Chapter 13. In that case, let’s say the home is worth $150,000 and the mortgage balance on the First Mortgage is $149,999 and that the Second Mortgage has a balance of $35,000.
That means that one dollar of equity is available for the Second Mortgage and; therefore, you will have to pay the monthly mortgage payment on the Second Mortgage.
What happens if I become hospitalized or lose my job while in a Chapter 13?
If you have a reversal of fortune such as illness or loss of income, you should immediately contact my office to see what steps we should take in order to try to protect either your Confirmed Chapter 13 Plan or to prevent your case from being dismissed.
What is a 0% Chapter 13 plan?
Let’s say that you owe $10,000 in unsecured debt and your Chapter 13 Plan is a 0% Plan. This means that you are not paying money or dividend to unsecured creditors.
Now let’s say that on your unsecured debt, you are going to pay $1,000, then you would have a 10% Plan. If you were going to pay $5,000, then you have a 50% Plan or a 50% dividend to unsecured creditors.
If you have filed a Chapter 7 and received a discharge 1 week ago, can you file a Chapter 13?
Yes, once you have filed a Chapter 7, you can still immediately file a Chapter 13. But you can’t obtain a discharge of your debts in the Chapter 13. As a practical matter, this would have any serious impact on you that you can’t obtain a discharge in Chapter 13 because all of your debt which can be discharged, would have been discharged.
The problem can arise if 6 – 7 years ago you obtained a discharge in Chapter 7, and now you have to file a Chapter 13. If you accumulated considerable debt within that 6 – 7 years prior to filing your Chapter 13, this can cause considerable problems for you.
You can obtain a discharge of your debts once every 8 years under President Bush’s bankruptcy law. (under the prior Bankruptcy Code, you could obtain a discharge of your debt once every 6 years)
How many times do you go to court for a Chapter 13?
Usually you have to go to Court at least twice for a Chapter 13.
The first time you have to go is like a Chapter 7. You have to attend a 341 Meeting of Creditors.
What documents are need for a Chapter 13?
The same documentation that has to be submitted to the Chapter 7 Trustee, must be submitted to the Chapter 13 Trustee 10 days prior to the 341 Hearing. The documents to be submitted are:
- pay stubs- in the 60 days prior to filing
- tax returns for the last 2 years both State and Federal Returns
- copy of recorded deeds
- certified copy of divorce judgment
- appraisal of real property not more than 6 months old
- monthly billing statements for cars and mortgages showing the monthly payment and loan balances
- statements showing cash surrender value of life insurance policies
- bank statements for the last year
- pay stubs for the last year
After you have been examined by the Trustee and all documents submitted, then you will have to go to Court for the Confirmation Hearing.
The address for the 341 Hearing is at 265 Church St, 11th Floor, New Haven, CT . People’s Bank is located on the bottom floor and there’s no number on the building but the sign, – One Century Tower.
When and where is the confirmation hearing held?
Your Confirmation Hearing is usually held approximately 90 days after you have filed your Chapter 13 Petition. It could be longer.
Your Confirmation Hearing will be held in the Courtroom where the Judge will be presiding. At the 341 Hearing, there is no Judge present.
The 341 Hearing room is usually never in the Courtroom but conducted in a special hearing room which is sometimes in the Courthouse or in a separate building.
The Bankruptcy Court is located in New Haven, CT at 157 Church St., It’s the tallest building in New Haven and on the bottom floor is the Bank of America.
What happens at the confirmation hearing?
- you find out if the Trustee or creditors object to your Chapter 13 Plan
- if there is an objection there will be a contested confirmation hearing
Usually, our office has worked out all the issues with your creditors and the Trustee’s Office. Therefore, at Confirmation Hearing, you will know whether or not the Trustee or any creditor is objecting to your Chapter 13 Plan.
If there is an objection, then you will have what is called ‘a contested confirmation hearing’.
A contest confirmation hearing is held at the end of the Court calendar because the Court first wants to dispose of all matters which aren’t contested.
What are proofs of claim?
- when creditors file claim regarding your debts
- the claims are called Proof of Claims
- creditors have an opportunity to be heard regarding their claims of debt
- you can review and/or accept or reject the Proof of Claim
- the Trustee checks the Proof of Claim against the bankruptcy rules
Creditors are invited by the Bankruptcy Court to file claims regarding your debts.
These claims are called, ‘Proofs of Claim’. (POCs) The Court under the Code wants to give an opportunity to all your creditors to be heard regarding their claims of debt.
You will have the opportunity and, indeed, the obligation to review each Proof of Claim.
You can object to any POC and, indeed, it’s very important to object to POCs when you disagree with their claim for debt.
Why? The Chapter 13 Trustee will be checking the POCs and applying the Bankruptcy Code rules to your Chapter 13 Plan.
Let’s say that the mortgage company claims that your arrearage is $20,000 but you have proof that$10,000 in payments you made were not included in their POC.
If you don’t object to the POC, then you will have to repay $20,000 in your Chapter 13 Plan versus repaying $10,000. Therefore, you can see the necessity of reviewing the POCs.
Must you obtain a Certificate of Education to obtain a Chapter 13 discharge
Even though you have reorganized your finances and been living on a strict budget for 3-5 years, you must under the New Bankruptcy Code (BAPCPA) receive a Certificate of Education from an approved agency before you can receive your Chapter 13 Discharge and this Certificate has to be filed with the Court.
Will a chapter 13 stop harassing phone calls from creditors?
Yes. A Chapter 13 will stop harassing phone calls by creditors like a Chapter 7 will. The Automatic Stay will prevent creditors from contacting you. No doubt about this.
Can file another Chapter 13 after your case was dismissed?
- yes if a special hearing is heard within 30 days in order to continue the Automatic Stay
- the hearing must occur within 30 days
- if it’s not heard within 30 days you cannot be granted a continuance
Yes. You can immediately file another Chapter 13 but you must have a special hearing within 30 days of filings asking the Court to continue the automatic stay.
The hearing has to physically occur within the first 30 days or the Court will not be able to grant a continuance of your Automatic Stay. The new bankruptcy code requires this procedure as a method to discourage and prevent you from saving your home.
If a creditor brings a motion for relief from stay as against your home and then you dismiss your case, can you immediately file another Chapter 13?
No, you can’t file for another 180 days and this issue can easily happen when you are trying to refinance your home and the refinancing falls through; and then you are 180 days (or 6 months) exposed to the creditor who could easily obtain a foreclosure against you in state court.
Foreclosure of mortgage is a state court action.
How long does a Chapter 13 last?
- between 36 and 60 months
- the longer the plan, the short the monthly payments
A Chapter 13 can run for 36-60 months. The longer the Chapter 13 Plan, the smaller will be the monthly payment.
Why must you budget in a Chapter 13?
Over the years, I have discovered that the clients who budget the best are the most successful in Chapter 13.
I have developed a manual system for budgeting which emphasizes habit development and review.
Essentially, budgeting involves new habit development – you have save money when you are paying dentist bills, car repair bills, etc.
So first, I have a manual system for new habit development in order to learn to budget effectively. Paying your Trustee payments and your mortgage payments are absolutely necessary if you are going to be successful.
But let’s say that you make your first payments, now what? Then comes the long stretch to the finish line and the only way to manage this is by developing new habits. I have a manual system which I call the PennyWatchers.
I usually start clients with the manual system and then invite clients to use our website, www.pennywatchers.com which takes the manual system I developed with clients to the computer age.
I have found that the clients who are the most organized and are tracking their expenses, are consistently the ones who get their Chapter 13 Plans confirmed and completed.
I tell clients that they have to take it on faith that my experience (which has been extensive in Chapter 13) have found that the family that budgets together is the most successful in Chapter 13.
No client has ever been able to say after 90 days of using the my program that it was a waste of their time.
What are the fees and costs of a Chapter 13?
The typical costs for a Chapter 13 are as follows:
- Filing Fee: $274.00
- Appraisal of Real Estate: $250-350
- Title Search: $50-125
- Credit Counseling Fee: $50 per household
- Conversion Fee for converting from a Chapter 13 to Chapter 7 is $15.00.
- Amendments to Petition: $26 per amendment
The range of legal fees: $1,500-$3,500
Usually, clients pay a portion of the legal fee and the balance of the legal fee is paid through the Chapter 13 Plan. If the balance on your legal fee is $1,500, then your monthly payments for legal services averages to $25 per month.