Posts Tagged ‘Chapter’

Should Annuity Proceeds Recently Received Be Included As Income In Chapter 13 Payment Calculation?

Finance News | Posted by Kiara Withers
May 06 2011

A prospective Chapter 13 bankruptcy client currently makes about $30,000 per year salary. He wants to file bankruptcy as soon as possible to stop an ongoing lawsuit. Based on his salary alone, he would make relatively minimal payments to his Chapter 13 plan and over the five year plan would pay about 20% of his unsecured creditors.

Many years ago this person won a personal injury law suit resulting in a structured settlement in the form of an annuity contract with a national insurance company. Three months ago he received the final annuity payment of $40,000. He asked whether the annuity payment will be treated as income for the purpose of determining the Chapter 13 plan payment. If included as income, his plan payment would increase substantially but he would not have any future annuity payments forthcoming to help pay the higher plan payment.

The annuity is an exempt asset. Florida statutes, and Florida case law, also exempt annuity proceeds even after the annuity proceeds are received and deposited in a financial account. The annuity and the proceeds would be exempt if the debtor filed Chapter 7.

The annuity payment three months prior to bankruptcy should not be treated as income. It is not a recurring payment. There will be no future annuity receipts during the Chapter 13 bankruptcy.

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Tags: Chapter, Chapter 13
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Who Do I Call For a Chapter 13 Attorney?

Financial Analyst | Posted by Joseph Carr-Boyd
Dec 07 2010

Chapter 13 bankruptcy filings, like Chapter 11 filings, involve a reorganization of an individual’s debt. Under this chapter, a person cannot get debt protection. They merely give debtors time to pay off their debts. The repayment period can take between three to five years.

When Might I Have to File for Chapter 13? A person must go through the means test. If he goes below the average median income he is eligible for this and Chapter 7. Chapter 7 is more common because it does allow people to discharge debts. A chapter 11 attorney can hep a person figure which type is right for him.

Homeowners who want to keep their property will file under Chapter 11 or Chapter 13. Bankruptcy proceedings prevent banks from foreclosing on homes, let owners keep their property, and most importantly, buys the homeowner time. Sometimes a person just needs more time to get back on his feet.

Please do not hesitate to contact us at one of our California offices by calling 1800.941.6730 for your debt resolution needs. You can receive a free consultation over the phone, or request a free in person appointment at a Sagaria Law office nearest you. Please visit our website at www.sagarialaw.com and fill out a free online evaluation form to determine if you are a qualified candidate for bankruptcy. Sagaria Law’s team of bankruptcy lawyers, bankruptcy client care specialists and bankruptcy staff can assist you with all aspects of your bankruptcy case. W

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Tags: Chapter, Chapter 13
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Should I Hire a Chapter 7 Attorney?

Financial Analyst | Posted by Joseph Carr-Boyd
Nov 27 2010

If you are filing for Chapter 7 bankruptcy and thinking of hiring a lawyer, it is important to understand the benefits and negatives before making a final decision. With the importance of the outcome that filing Chapter 7, you will wish to ensure that it is handled properly.

Hiring a Chapter 7 attorney can give you peace in mind knowing that you have an individual on your side that has been through this process before. The filing process can be a difficult and confusing; with an attorney will be able to guide you through it. A professional can ensure that you qualify for a Chapter 7 bankruptcy as it has specific rules of eligibility. Not qualifying for Chapter 7 after filing delays the process as will have to wait for 180 days to file the proper bankruptcy papers.

The paperwork can be daunting and if not properly filled out harm you. With a Chapter 7 attorney, you are able to answer all the questions properly with guidance. A professional by your side during the trustee meetings can assist you with answering questions. If you answer a question in the wrong manner during this meeting, it will help you avoid mistakes. The only disadvantage to hiring an attorney to step you through the process is the cost. While it may seem counter-intuitive to spend money when you are in a tough financial crisis, it could actually save you more than you spend.

At Sagaria Law, we offer an exceptional team of bankruptcy lawyers, bankruptcy client care specialists and bankruptcy staff supporting California.

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Tags: Chapter, Chapter Attorney
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Can Chapter 13 Debtor Add A Second Mortgage Strip To An Already Confirmed Chapter 13 Plan?

Financial Guide | Posted by Kiara Withers
Sep 30 2010

A Chapter 13 debtor can strip a second mortgage from his primary residency if the value of his home is worth less than the first mortgage so that there is no equity securing the second. I received a call from one of my Chapter 13 clients who had filed Chapter 13 bankruptcy in 2007. The debtor had a first and second mortgage on his residence. At the time he filed the house was worth more than the first mortgage so the Chapter 13 plan did not attempt to strip the second mortgage. The debtor’s plan was confirmed at the end of 2007. The debtor is current on his payments. He reports that since the plan confirmation his residence has continued decreasing in value, and that currently the house is worth significantly less than the first mortgage. He wants to know if he can modify his confirmed Chapter 13 plan to strip the second mortgage.

The general rule is that a debtor’s Chapter 13 plan can and should be modified to reflect significant increases or decreases in disposable monthly due to changes in income or expenses. I have never been asked before to insert a mortgage strip into a confirmed Chapter 13 plan. My paralegal looked into the issue by asking some Chapter 13 experts. We found that the answer is that there is no answer, at least in our bankruptcy courts. We could find no one who has seen a post-modification mortgage strip.

My client decided not to pursue the issue because of the time, effort, and expense of moving forward with a legal action where the outcome was so uncertain. Nev

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Tags: Chapter, Chapter 13, Chapter 13 Debtor, Second Mortgage
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Judgement Creditor Serves Writ Of Garnishment Upon Chapter 13 Trustee And Gets Debtor’s Money

Financial Guide | Posted by Kiara Withers
Sep 06 2010

A Chapter 13 debtor has the right to convert to dismiss his Chapter 13 case or to convert the case to Chapter 7 at any time provided he acts in good faith. The court will dismiss a Chapter 13 case if the debtor fails to make timely plan payments. When a Chapter 13 case is dismissed the Chapter 13 trustee may be holding money from the debtor’s previous plan payment which money the Chapter 13 trustee has not yet distributed to the creditors. The Chapter 13 trustee is supposed to return the money to the debtor after the dismissal. The debtor is then left to fend for himself against his creditors without the protection of the bankruptcy stay. That’s how it usually works.

A judgment  creditor tried something different in a recent Chapter 13 case in the Orlando Division. A Chapter 13 debtor was unable to keep up with plan payments, and the court issued an order dismissing the Chapter 13 bankruptcy. After the order, the debtor filed a notice of conversion to Chapter 7, and the court converted the case to Chapter 7 immediately thereafter. In between the time the court issued the order of dismissal and the time the debtor filed his notice of conversion the judgment  creditor obtained a state court writ of garnishment against the Chapter 13 trustee. The creditor argued that it was entitled to garnish all the money the Chapter 13 trustee was ordered to pay the debtor.

The bankruptcy court upheld the garnishment against the trustee. This one creditor got all the debtor’s money. In practice, creditors are not usually this aggressive in bankruptcy cases. Most creditors do not that quickly. However, as word of this opinion spreads among the creditor community other creditors with judgments may closely monitor dismissals of Chapter 13 cases and attempt similar garnishments.

If a debtor intends to convert a dismissed Chapter 13 to a Chapter 7 case he most do so promptly. The best practice is to file notice of conversion before the court enters the dismissal order so the court will order the conversion rather than order funds payable to the debtor which funds could be subject to garnishment. The case is In re Fisher, 09-07498.

Tags: Chapter, Chapter 13
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Reaffirmation Of Mortgage Note In Chapter 7: Interesting Post By Atlanta Attorney

Financial Guide | Posted by Kiara Withers
Aug 09 2010

Many mortgage companies ask Chapter 7 bankruptcy debtors to sign reaffirmation agreements if they intend to stay in their house through their bankruptcy. Reaffirmation means that the debtors will remain personally liable on their mortgage note after the bankruptcy discharge, and it means the lender can sue them if they subsequently are unable to make payments. I saw a good discuss of the mortgage reaffirmation topic in a blog post by Atlanta bankruptcy attorney Jonathan Ginsburg. Mr. Ginsburg points out two problems with not signing a reaffirmation; first, future mortgage payments do not help restore credit, and two, without reaffirmation the bankruptcy is a technical mortgage default. In addition, I have found that bank’s do not cooperate with debtor’s who subsquently need documentation, such as payoff numbers, if they have not formally reaffirmed personal liability after bankruptcy.

Notwithstanding the above, I advise my clients not to reaffirm mortgage debt because doing so results in a large personal financial liability. I agree with Mr. Ginsburg’s conclusion that lenders will unlikely default a mortgage for any reason as long as the borrower is making payments. I also agree that merely continuing current payments by itself will not result in personal liability absent a signed reaffirmation agreement.

Tags: Chapter, Note Chapter
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