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Oct 2022

Once Up an Time: A Chapter 13 Story

Posted by / in Chapter 13, Chapter 13 Bankruptcy /

Once up a time: Widow Anna saves her house and clears her debt with Chapter 13.

Once up a time, an elderly widow named Anna needed to replace the HVAC in her townhouse. Her air conditioning broke down and she needed to fix it.

Anna was poor.  She had $1404 monthly from her retirement and $1232 from social security.  Her credit score was dragged down by the $33,000 she had on credit cards—even though the cards were all still current.

Mean Boys LLC offered to install and finance her HVAC—they put her in a seven-year lease for the HVAC at $146.00 month. It was a lease, not a purchase. At the end of the seven years (after paying $12,264) it would still NOT be paid for.

Chapter 13 cannot modify a consumer lease

Mean Boys LLC gave Anna a seven year lease on her heating and a/c unit. At the end of seven years, it still wouldn’t be paid for.

Anna didn’t have much choice—she needs to have AC in the summer and heat in the winter. But when she started to pay Mean Boys, her credit cards fell behind.

No wonder Anna’s credit cards fell behind! Her minimum payment on the credit cards was $991.

After paying her mortgage, her condo fee, and Mean Boys, she only had $967 left over.  She had to eat and pay utilities and car insurance, before trying to pay those credit cards.

That’s why Anna came to talk to Nice Bob, a bankruptcy lawyer.

Anna’s Chapter 13 payment plan $891 a month

Nice Bob, the bankruptcy lawyer, put Anna in a chapter 13 payment plan.  (Virginia law is NOT favorable to widows—or other single people—who want to file Chapter 7 bankruptcy and keep their house. That’s why Anna chose Chapter 13.) Chapter 13 is a payment plan. Nice Bob was able to get Anna approved for a Chapter 13 payment of $100 for 36 months.  That was $3600 to clear $33,000 in debts.

Nice Bob also set a trap for the Mean Boys, LLC.  Chapter 13 does NOT help a consumer who needs to reduce the payment on a lease.  (And Mean Boys LLC had very good lawyers—their HVAC lease was a very strong lease.)

Mean Boys LLC fall into Nice Bob’s trap

Mean Boys—sure enough—fell into the trap that Nice Bob set. They made a mistake and violated the “automatic stay.”  They could end up owing Nice Bob a couple thousand dollars in legal fees.

Nice Bob didn’t want those legal fees. Instead, he wanted to pressure Mean Boys to help Anna.  And that worked! Mean Boys agreed to cut their payment in half—from $146 a month down to $73. (That saved Anna $4234 over the remaining months of the lease.) 

Now Anna, our elderly widow, can keep her house, and her AC and heating. And live happily ever after.

PS This is a once upon a time. Any similarity to any living person or business is purely coincidental. 


(PPS.  Homeadvisor.com says the average cost of installing an HVAC system is $5845.  Anna’s condo is quite small, so a fair price might have been less than that average.) 




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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.