Source: https://waltzerlawgroup.com/what-is-bankruptcy/chapter-13-bankruptcy/
Timestamp: 2020-06-06 05:25:31
Document Index: 463697038

Matched Legal Cases: ['§ 521', '§ 302', '§ 1930', '§ 1307', '§ 1322', '§ 1324', '§ 1328', '§ 1328', '§ 1328', '§ 523']

Chapter 13 Bankruptcy Lawyer | Attorney in NY & NJ | Waltzer Law Group
Chapter 13 Bankruptcy is a ‘repayment’ plan. Sometimes it is referred to as a “wage-earner’ plan or a “mini-reorganization”. You pay something back to your creditors for a period usually between 36 and 60 months. There are basically Three kinds of people who need chapter 13 bankruptcy.
House-Savers
Asset-Havers
The second kind of person who needs chapter 13 is someone who is behind on the mortgage payments for a house, and wants to save the house.
House savers are people who through some sort of hardship got behind on their mortgage payments. They want to keep their home but they need time to catch up with the unpaid back mortgage payments (called mortgage arrears). Sometimes the banks are so aggressive that they make it impossible for people who could otherwise afford their mortgage to stay. Chapter 13 bankruptcy is for these people.
Let’s say your monthly mortgage payment is $3,000 and you are six months behind on payments ($18,000). Your bank is giving you some impossible catch-up plan where you have to pay $5,000 per month for nine months. You can’t afford it. Chapter 13 is your solution. So long as you can afford it, you can pay your regular mortgage and pay the $18,000 arrears over a FIVE-YEAR PERIOD. That means you pay your mortgage and you pay an extra $300 per month in a chapter 13 plan. You can get caught up and keep your home.
Chapter 13 can be a home run!
Though we have Bankruptcy Lawyers in New Jersey, California, Florida and other states, let me give a New York Bankruptcy Law example:
In New York, you can have a wedding ring worth $5000 and it is totally safe. This is so because you have a law that protects your ring. This is called a bankruptcy exemption. The exemptions are different from state to state. For instance, New Jersey Bankruptcy Law permits you to protect a ring worth more than $10,000 in certain instances! But, let me proceed with the New York example (where you can only have a ring worth $5000)
If you can afford $333 per month, you file chapter 13 bankruptcy. If you file chapter 13 bankruptcy, you will pay back at least the amount your creditors would get if you had filed chapter 7 and the ring were taken by the bankruptcy trustee.
For More information on Chapter 13, I found the Federal Website Most Helpful. The Text Below is Copied from the US Courts Website.
Chapter 13 Individual Debt Adjustment The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)
A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. Unless the court orders otherwise, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs. Fed. R. Bankr. P. 1007(b). The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. 11 U.S.C. § 521. The debtor must provide the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302(a). (The Official Forms may be purchased at legal stationery stores or downloaded from the Internet at http://www.uscourts.gov/bkforms/index.html. They are not available from the court.) The courts must charge a $235 case filing fee and a $39 miscellaneous administrative fee. Normally the fees must be paid to the clerk of the court upon filing. With the court’s permission, however, they may be paid in installments. 28 U.S.C. § 1930(a); Fed. R. Bankr. P. 1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8. The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition. Fed. R. Bankr. P. 1006(b). For cause shown, the court may extend the time of any installment, as long as the last installment is paid no later than 180 days after filing the petition. Id. The debtor may also pay the $39 administrative fee in installments. If a joint petition is filed, only one filing fee and one administrative fee are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. 11 U.S.C. § 1307(c)(2).
There are three types of claims: priority, secured, and unsecured. Priority claims are those granted special status by the bankruptcy law, such as most taxes and the costs of bankruptcy proceeding. (3) Secured claims are those for which the creditor has the right take back certain property (i.e., the collateral) if the debtor does not pay the underlying debt. In contrast to secured claims, unsecured claims are generally those for which the creditor has no special rights to collect against particular property owned by the debtor. The plan must pay priority claims in full unless a particular priority creditor agrees to different treatment of the claim or, in the case of a domestic support obligation, unless the debtor contributes all “disposable income” – discussed below – to a five-year plan.11 U.S.C. § 1322(a).
If the debtor wants to keep the collateral securing a particular claim, the plan must provide that the holder of the secured claim receives at least the value of the collateral. If the obligation underlying the secured claim was used to buy the collateral (e.g., a car loan), and the debt was incurred within certain time frames before the bankruptcy filing, the plan must provide for full payment of the debt, not just the value of the collateral (which may be less due to depreciation). Payments to certain secured creditors (i.e., the home mortgage lender), may be made over the original loan repayment schedule (which may be longer than the plan) so long as any arrearage is made up during the plan. The debtor should consult an attorney to determine the proper treatment of secured claims in the plan.
No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. 11 U.S.C. §§ 1324, 1325. Creditors will receive 25 days’ notice of the hearing and may object to confirmation. Fed. R. Bankr. P. 2002(b). While a variety of objections may be made, the most frequent ones are that payments offered under the plan are less than creditors would receive if the debtor’s assets were liquidated or that the debtor’s plan does not commit all of the debtor’s projected disposable income for the three or five-year applicable commitment period.
As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include certain long-term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime. To the extent that they are not fully paid under the chapter 13 plan, the debtor will still be responsible for these debts after the bankruptcy case has concluded. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for restitution for damages awarded in a civil case for willful or malicious actions by the debtor that cause personal injury or death to a person will be discharged unless a creditor timely files and prevails in an action to have such debts declared non-dischargeable. 11 U.S.C. §§ 1328, 523(c); Fed. R. Bankr. P. 4007(c).
After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a “hardship discharge.” 11 U.S.C. § 1328(b). Generally, such a discharge is available only if: (1) the debtor’s failure to complete plan payments is due to circumstances beyond the debtor’s control and through no fault of the debtor; (2) creditors have received at least as much as they would have received in a chapter 7 liquidation case; and (3) modification of the plan is not possible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are non-dischargeable in a chapter 7 case. 11 U.S.C. § 523.