Chapter 13/Debt Consolidation

This plan is often called a wage earner’s plan and allows individuals with some monthly income after the payments of all household expenses to file this type of bankruptcy.  Chapter 13 also allows you to save your real property (Home) or manufactured home if you are delinquent in the payment of your monthly mortgage payment and save your car.  You may need to take immediate steps to file a Chapter 13 to protect your home and other property.

In order to file a Chapter 13, you must be working (wages) or have some other source of steady income, such as social security, military retirement or other retirement.  You can even use help from your spouse or others.

A Chapter 13 may consolidate all your debts.   After your paper work is filed with the bankruptcy court you will pay to the United States Trustee one monthly check.  How much you pay will depend on your income and expenses.  If your income is not sufficient to pay your ordinary living expenses with some amount left over, you may not qualify. (See Chapter 7 ) Remember, when you are calculating ordinary expenses, do not include payments on credit cards, unsecured loans and medical bills.  At your free consultation our Chapter 13 bankruptcy lawyers will review with you what to stop paying.  DO continue to pay your house note, car note, boat payments and other payments of this nature, if you want to keep these items.

Other Things You Need To Know About Chapter 13:

• Stops Foreclosure of your house
• Stops The repossession of your car or boat
• Stops the garnishment of your wages
• Protects co-signers
• Keep Everything?
• Avoid 5 year plans
• How to get “thrown our” of Chapter 13 and lose your house!
• Do I have to go to court and what must I bring to court?
• Tax returns and tax refunds   
• Military Issues
• Bankruptcy Intake Forms

STOP FORECLOSURE ON YOUR HOUSE

Normally, your lender will send you a letter threatening foreclosure.  This would be a good indication that you might need a free consultation, but it is not the beginning of a court proceeding to take your house or other real property.

The lender will have its attorney prepare a complaint which will be served along with a summons for you, and maybe your spouse.  This is the beginning of a court proceeding to take your house!

Many lenders will tell you that despite being served, they will “work with you.”  Beware!  The clock is still ticking and you have 20 days to answer the complaint.  If you bring the complaint to our bankruptcy attorneys within the 20 days, we will prepare an answer for you for FREE.

If the 20 days is up and you don’t file an answer, the lender’s attorney will file a motion for Summary Judgment and at that hearing, the court will enter an order setting a date to sell your house on the Courthouse steps.   Once the house is sold, per the order, it is gone.

STOP THE SALE

When we file your paperwork with the Bankruptcy Court, the Foreclosure Sale stops, even if it is the morning of the sale.  As long as we file, it will save your house, provided your Chapter 13 Plan is confirmed and you make the payments called for in the plan.

When we file, the lawsuit also stops and they cannot take any further action without the permission of the Bankruptcy Court.

STOP THE REPOSSESSION OF YOUR CAR OR BOAT

Once we file your paperwork with the Bankruptcy Court, all efforts of taking your car, boat or furniture must stop.  Creditors cannot continue to harass you, call you or continue with any lawsuit.

STOP GARNISHMENT OF YOUR WAGES

Once we file the paperwork with the court, most garnishments on your wages stop instantly.

PROTECT CO-SIGNERS

When you file a Chapter 13 Bankruptcy, the creditor cannot proceed against anyone who has co-signed with you in order for you to obtain the loan or credit if it is a consumer debt.  The creditors must wait to be paid by the U.S. Trustee from your plan payments.

KEEP EVERYTHING?   

You do not lose any property in a Chapter 13, if your plan is confirmed and you make your plan payments.  This includes your house, car, furniture and other property.

WANT TO GET RID OF MISTAKES?

Chapter 13 bankruptcy will let you give back that old lemon of a car to the creditor and you can stop making those payments.  They will be treated as unsecured and wiped out during the Chapter 13 proceeding.  Remember that time-share you bought in Orlando or Destin or anywhere for that matter that you have only been to once?  These debts can be treated just like the car; you can quit making the payments and get rid of the debts. If you want to keep them, that is okaybut you will have to keep making the payments as required.  This works for many kinds of debts that we can discuss at our first meeting.

REDUCE YOUR CAR PAYMENT

The current law (March 2004) allows you to reduce your car payment in a Chapter 13 if the car isn’t worth what is owed on it or if there is a high interest rate on the loan.   We can value the car at the time of filing your paperwork and you will pay just what is owed on the car and at reasonable interest rate.  This saves hundreds of dollars a month in most cases.

AVOID 5 YEAR PLANS

In a Chapter 13, your plan must be a minimum of 3 years (36 months) up to 5 years (60 months).  Some law firms like 5 year plans because it is easier for them but it can cost you money.  It is very rare that we can’t get a 3 year plan to work and accomplish your goals.  Think about the savings to you if you are paying $250.00 a month into a plan, you save $6,000.00 in a 3 year plan versus a 5 year plan. (60 months - 36 months = 24 month @ $250.00) Think about what it will cost before you sign for a 5 year plan, You don’t have to pay back all the monies owed to your unsecured creditors.

HOW TO GET “THROWN OUT” OF A CHAPTER 13 AND LOSE YOUR HOUSE

Within a short time after your paperwork is filed with the court, you will start making your monthly payment (yes, we can have it bi-weekly if that helps) and soon your plan will be confirmed.

The following will result in the U.S. Trustee filing a motion to dismiss (throw out) your Chapter 13 and once the Chapter 13 is dismissed, your mortgage company can complete the foreclosure and take your house:
        

 1. Making your monthly payment late to the U.S. Trustee, more than once.

 2. Having your check to the U.S. Trustee returned as NSF (bounced check).

 3. Not making any monthly payment to the U.S. Trustee at all.

 4. Not turning over your income tax refund during the years you are in the plan

 5. Not sending a copy of your U.S. Tax Return (form 1040) to the U.S. Trustee each year you are in the plan, regardless of whether you get a refund.

 6. Not notifying U.S. Trustee and us of increase of 10% or more, in income during the life of your plan

These 6 items listed above are the most frequent reasons for dismissal.  Our firm knows that “things happen.”  If during the years of the Chapter 13 plan you have to use a tax refund or miss a payment, we can help.  We do have to charge a small extra fee for plan modification, skipping payments and use of Tax Refunds after your plan has been confirmed.

DO I HAVE TO GO TO COURT AND WHAT DO I HAVE TO BRING?

It is rare that you ever have to go to court and see or speak to the Judge.   What you must do is go to a 341 Meeting that is presided over by a Trustee.  A Trustee is an attorney who will ask you simple questions. 

             Example questions:

                         Why did you file Bankruptcy?

                         Did you list all your Creditors?

                         Did you list all your Assets?

                         When did you move into your house?

                         Do you understand that you have filed for Bankruptcy?

These meetings are scheduled every half-hour during the day and last 5-10 minutes.  Your Chapter 13 Trustee may ask additional questions about your income and expenses.

What To Bring:

What you must bring are your current Driver’s License.  NOTE!! The address on the Driver’s License must be the same as where you are living.  Sometimes your license may show an old or different address - if so, go to the Driver’s License Bureau and have it changed, as this is a requirement.  Bring the original Driver’s License; no photo copies. You must also bring your Social Security Card with you...again, bring the original and not a photo copy.  The dress is casual but dress sensibly, no tank tops, shorts, cut-offs, etc.

TAX RETURNS

Prior to filing your Bankruptcy paperwork with the court, both for a Chapter 13 Wage Earner Plan and a Chapter 7 Elimination of Debt, you must furnish to us your last 3 years' Tax Returns (1040).  If you have lost them or did not have to file, we can help you with these issues prior to filing your papers.

Once your plan is confirmed, you must send a copy of your income tax return to the U.S. Trustee, every year while you are in the plan.  If your income goes up or down more than 10%, we may need to modify your plan payments.  You must tell us if this happens so we can help you.

TAX REFUNDS

Chapter 13-Wage Earner Plan

During the years that you are making your plan payments, you must give your tax refund to the U.S. Trustee.

I need my refund!    There are times when you simply must use your tax refund.  We see this situation when needs for funds arise due to medical expenses, car repairs or moving for a new job and etc.  The Chapter 13 Trustee understands when this occurs and sometimes upon filing a motion, we can obtain permission for you to use the funds.  This is a rare situation and you cannot do this every year.

MILITARY ISSUES

The issues facing the Military through a Chapter 13 or a Chapter 7 are the same.

Can you file in the Northern District of Florida?

If you have been living here for 180 days, you may file in the Northern District of Florida and your 341 hearing will be in Pensacola if you live in Escambia, Santa Rosa, Okaloosa or Walton Counties. If you have been overseas or deployed prior to moving to Escambia, Santa Rosa, Okaloosa or Walton Counties, then you may be able to file after 90 days.

Although subject to a change, a number of military personnel have had to file Chapter 7-Eliminate Debts or Chapter 13-Wage Earner Plan in order to improve their security clearance as too much debt can result in a security issue.

The Military Policy is not to penalize a service member for seeking a Fresh Start through Bankruptcy. You can reaffirm (pay the balance) on your exchange card, therefore keeping the ability to use the exchange, if deployed.

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