Once Up an Time: A Chapter 13 Story

Posted by Robert Weed / 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.

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.) 

 

 

 

Chapter 13 and Tax Relief for Seniors Save Marian’s House

Posted by Robert Weed / in Chapter 13, Chapter 13 Bankruptcy, Weekly Posts /

Marian Saves Her House from Reverse Mortgage Foreclosure: She Filed Chapter 13 and Got Fairfax Senior Citizen Tax Relief

Before her husband died, Marian had taken out a reverse mortgage on her home. That way, they hoped, she wouldn’t have a house payment and she’d never have to worry about having a place to live.

But after a couple years, Marian got a reverse mortgage foreclosure notice.

In a Reverse Mortgage, You Don’t Have a Mortgage Payment But You Still Have the Tax Payment

Having a reverse mortgage does NOT mean you have a free place to live. You don’t have to pay the bank, but you still have to pay real estate taxes and insurance. Marion’s monthly tax was $390.00–lots cheaper than rent but not free.  

The reverse mortgage company paid the real estate taxes–but Marian was required to pay reverse mortgage company back. She didn’t understand (and didn’t have much money) and so she didn’t do it. For three years. That gave the reserve mortgage company the reason to foreclose her.

Chapter 13 in the Nick of Time

Marion’s house was scheduled to be sold out from under her on July 28. We filed Chapter 13 on July 27.  That stopped the foreclosure and the Chapter 13 plan gave her five years to pay the mortgage company back for those taxes.  Wew!

But Marion now has to make the chapter 13 payment. It’s $280 a month.

                                                  

Tax Relief for Seniors Saves the Day

On top of that $280 a month Chapter 13 payment, how can Marion pay next year’s real estate taxes?  Good news. Fairfax County–like most of the counties in Northern Virginia–has tax relief for low income seniors. (Here’s the info for Loudoun. And Prince William.) She applied and got approved. No more real estate taxes. Her budget is very tight, but she will save her house.  

PS  For More Info on Danger of Reverse Mortgage Foreclosure

What happened to Marian happens a lot. And not everybody moves fast enough to stop it. The Naples Daily News had this great article in 2019 about senior citizens in reverse mortgages who end up losing their homes in foreclosure.    

 

We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place

Posted by Robert Weed / in Blog, Chapter 13, Chapter 13 Bankruptcy, Weekly Posts /

We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place

Lonnie was about to lose his federal job. His clearance review showed he owed Dyck-O’Neal $127,153 from a foreclosure deficiency. He needed to take care of that. Or he’ll lose his clearance and his job.

Obviously he didn’t have $127,153.  And when we looked at it, he couldn’t file Chapter 7 bankruptcy either.  When his parents died, Lonnie had inherited a share of their home place. The parents’ home place was paid for. A Chapter 7 bankruptcy trustee would take and sell it.

Chapter 13 Bankruptcy Payment Plan–How Can He Afford it?

He needed to do a Chapter 13 bankruptcy.  To protect his clearance by paying his debts.  And protect the family home place–by paying his debts.  But, in a Chapter 13 payment plan, how much would Lonnie has to pay?

The Chapter 13 trustee demanded a payment Lonnie couldn’t afford. The trustee didn’t want the whole $127,153.  But he wanted most of that to be paid.

We solved that problem by knocking out the Dyck-O’Neal $127,153 claim. We knocked them out under the statute of limitations.

What’s the Statute of Limitations

The statute of limitations is a law that says if a creditor leaves you alone too long, they are too late. More than five years after the mortgage company accelerated the loan (starting the foreclosure process) was too late.  (That’s five years under Virginia law. Each state sets their own rules on this.)

Based on the records we had, it looked like the five years was up. Dyke-O’Neal had more complete records than us–at least they should have. But they didn’t fight.  So, we won.

Now all Lonnie has to pay are the smaller debts he was paying anyway.

 

Don’t put it off

Foreclosure or repossession? Talk to a bankruptcy lawyer right away. You probably have eligibility now–you need to find out of course.  And in three or four years when they come after you, you might not.  (Lonnie could have filed Chapter 7 when the house foreclosed; after his parents died, then he couldn’t.) Usually relying on good luck doesn’t work real well. 

 

 

 

We Stop Navy Federal Trying to Pull a Fast One

Posted by Robert Weed / in Chapter 13 Bankruptcy, Weekly Posts /

We Stop Navy Federal Trying to Pull a Fast One

This is a story of Navy Federal trying to take unfair advantage of a disabled vet; and how we were able to stop them.

Harry is the disabled vet. He wasn’t able to quite make ends meet when he filed Chapter 7 Bankruptcy in 2015, even though he was working. His biggest creditor then was Navy Federal.  He had a credit card, a personal loan, and a car loan with Navy.  He gave up the car—it was a 2007 with 131,000 miles.

Three years later, his health got worse. He lost his job and with it part of his income. Then, this year he go behind on his mortgage, talked to me, and we put him in a Chapter 13 payment plan, so he could catch the house up.

Up pops Navy Federal, demanding to be paid.  Demanding to be paid on the car he gave up in his 2015 bankruptcy, and the personal loan he cleared; and the credit card he cleared.

Navy Federal demands to be paid on debts that were cleared in bankruptcy five years before.

That set off the Chapter 13 Bankruptcy Trustee.  Not at Navy Federal; the trustee went off at Harry.  “You were supposed to list everybody you owed money to and you left Navy Federal out. Why’d you do that?”  The trustee asks the judge to toss out Harry’s payment plan, saying Harry had lied to the court.

My first job as a lawyer was to calm the trustee down. Harry could lose his house if his payment plan got tossed out.

Now, Navy had to know about the bankruptcy. Because if they’d been asking for payment during these five years, we’d have set them straight. They never did. they didn’t say anything until the slip their paper—called a proof of claim—into the bankruptcy court.

Maybe it’s an honest mistake.

They Probably Broke No Rule

The odd thing is there’s probably no rule broken here.  Even if they did it on purpose. In a case called Midland Funding v Johnson, the Supreme Court looked at the word “claim.” When creditors want to be paid in a bankruptcy, they file a paper called a Proof of Claim.

According to the Supreme Court, there’s nothing that says the “claim” has to be enforceable, it just has to be a claim. The burden is on Harry—and me, his lawyer—to catch them when they try to pull a fast one.  This time, we did.

 

 

Can’t Make Your Chapter 13 payments?

Posted by Robert Weed / in Blog, Chapter 13 Bankruptcy, Weekly Posts /

The Big Bailout Helps If You have to Skip Chapter 13 Payments

The big bailout law, just passed, includes some slack for people in Chapter 13. If you can’t make your Chapter 13 payments, we can ask the bankruptcy judge to add up to 24 months to your payment plan. Before that law was passed, if you got permission to skip some payments, you had to catch up in the months that are left.

How Will This Work Out?

I don’t know yet how this will work out. I’m thinking it over and talking with other, smart bankruptcy lawyers, while we try to see the best way to use this law.

 

Here’s a little more info Covid-19 and the 7 Year Plan «. Asking for more time only applies to people who already have an approved plan.  If you are not yet approved–or haven’t filed yet–you can’t ask for the extra two years to pay.

 

 

 

Chapter 13 in Virginia–A New Nightmare

Posted by Robert Weed / in Chapter 13, Chapter 13 Bankruptcy, Weekly Posts /

Chapter 13 in Virginia–A New Nightmare

The Bankruptcy Judge in Norfolk just made chapter 13 in Virginia even more dangerous.  And last night one bankruptcy judge in Alexandria hinted that he agrees.

 

The issue came up the the case of In re Marlene Evans.  Ms Evans made her bankruptcy payments to the Chapter 13 Trustee for five years.  According to her plan, she had paid about $4500 toward $23,000 in debts, and the rest of it was supposed to be discharged–gone.

Not so fast, said the Chapter 13 Trustee, Clint Stackhouse.  The Trustee said, you paid me, but you are behind with your mortgage payments. And sure enough, Ms. Evans admitted she was about ten months behind on the mortgage.

That means, argued the Chapter 13 Trustee, you didn’t keep all your promises–you paid me, but not the mortgage.  And you promised to do both.

The Judge, Stephen St John, agreed.  Even though she had paid what she promised toward the $23,000–mostly credit cards, personal loans and payday loans–they are allowed to start chasing her again, when the bankruptcy was over. Why, because she fell behind with the mortgage payments.

This doesn’t seem fair.

It doesn’t seem fair.  Ms. Evans paid what the credit cards were promised–why does she have to pay them again?  Since she admits she’s behind on the mortgage–well, everybody has always agreed that the mortgage company can come after her for that.  And if she can’t work it out, she’ll lose her house.  But why do the credit cards get to hide behind the mortgage company?

And it happens a lot in Chapter 13

People often finish Chapter 13 a few months behind on their mortgage.  That’s because Chapter 13 budgets are very tight.  In Northern Virginia, where the cost of living is real high, they are very, very tight.  So after four years of the Chapter 13 trustee draining every available cent from your budget, towards the end, you may need a $2500 car repair.  And skipping the last couple mortgage payments seems like the only way to do that. Figuring when the Chapter 13 payment is done, then there’s money to catch up the mortgage.

That strategy is now officially a disaster, at least in Tidewater, and maybe in all of Virginia.

The Judges in Alexandria

Last night was the annual dinner of the Bankruptcy Judges and the bankruptcy lawyers.  The Judges got to talk for an hour, and Judge Robert Mayer brought this up.  He didn’t say he agreed (Judges are not supposed to tell you what they think–except when you are in court in front of them.) But he did say that “most courts around the country” that have decide this, have all decided the same way.  

UPDATE: Ms. Evans Loses Her Appeal

A US District Court Judge in Norfolk, today on January 13, 2017, agreed with the bankruptcy judge. (You can read it here. Evans v Stackhouse.)  It’s now the law in Virginia. If you finish your Chapter 13, and pay the credit cards all your promised, but fell behind on your mortgage, your bankruptcy is tossed out. The credit cards are allowed to start chasing you all over again.

What’s the lesson? Avoid Chapter 13

Here are some disadvantages of Chapter 13, compared to Chapter 7.  

1.  If your income increases after you start paying, the Chapter 13 trustee will want more.

2.  If you inherit money while you are in Chapter 13,  that money goes to the Chapter 13 trustee.

3. In many cases, the bankruptcy trustee takes your refund.

4. It’s worse on your credit than Chapter 7.

5. Less than half of Chapter 13 filings succeed.

6.  And now, you can complete your payments and still not get a discharge, if you slip behind on your mortgage payments.  

 

If there’s any way, you want to avoid Chapter 13.   

Hank Hildebrand, Chapter 13 Trustee in the Middle District of Tennessee, and one of the nation’s most frequent speakers on Chapter 13 issues describes Chapter 13 as a “complex, expensive and unproductive system.”  

One more darn thing.

Just had a ruling from the 11th Circuit.  Suppose during the Chapter 13, you are injured in a car accident.   If you go ahead and sue for your injury, without first telling the bankruptcy court, you forfeit your right to sue for that injury.  

Chapter 13 is Anti-family

Client, two years into Chapter 13, asked me today if getting married will affect his Chapter 13 plan.  Well, it might. If the spouse is working, too, the trustee can claim that the increased family income is a substantial, unforeseen change, and ask that the payments be increase.

The members of Congress of the Judiciary Committee, who care about family values, could support a change in the law that blocks the trustee from arguing that.

Chapter 13: Your vehicle operating budget is too small.

Posted by Robert Weed / in Chapter 13, Chapter 13 Bankruptcy, Virginia Bankruptcy / No comments yet

If you are in Chapter 13, the vehicle operating budget you are allowed will be too small.

That’s (almost) a mathematical certainty.   Here’s why.

The census bureau shows–no surprise–that people who are working spend on average double on transportation gasoline and maintenance than people who aren’t.    (For more, see this from the American Association of State Highway and Transportation Officials.)

If you are in chapter 13, you’re working.  Unless you telecommute, you’ve got to get to work and get there everyday.

Your Chapter 13 vehicle operating budget in Northern Virginia is $277 a month, for one car, $544 for two or more.   That amount is figured based on all cars–NOT just on all cars owned by people who have to get to work.  (That budget is in the the bankruptcy means test.  That’s a formula that says how much money you have to pay back on your debts, and what you are allowed to keep to live on.)

There are more cars than jobs in America.

There are 250 million passenger vehicles.

There are only about 150 million Americans working or looking for work. )

So there are a hundred million cars in America that are NOT being used to get people to work.

If we recalculated that $277 by whether people work, we’d have $340 monthly for cars that take people to work;  $170 for cars that don’t.

If your car takes you to work, your Chapter 13 transportation budget will be $65 a month short every month.

If your car takes you to work, your Chapter 13 transportation budget will be $65 a month short, every month.  That’s $780 short each year.

To put it differently, if you use a tank and a half of gasoline a week, driving to work (plus whatever else you have to do), you have enough money left for insurance, but NO money for car repairs.

People with short commutes aren’t using a tank and a half.  But for many people in the outer suburbs, that’s low.

A budget with no money for car repairs is ok, if you a driving a new car under warranty.  No money for car repairs is awful, if you’ve got a hundred thousand miles on your car.  And you have to get through a sixty month chapter 13 plan.

Car repairs don’t come on a regular schedule (well, you should change your oil every three months.)  At some point you need new brakes, new tires, a new transmission.  And you will need them now!

Maybe you’ve saved some money, but since the bankruptcy court is taking ALL your “projected disposable income,” saving is tough.

At that point, you’re choices are: skip the rent, stop eating for two months, walk to work.  None of those work every well.

Recently, I proposed a chapter 13 plan, with a higher transportation allowance,  each year of the five years, as the cars got older.  I pointed that the Supreme Court said we should project virtually certain changes in a chapter 13, when calculating how much you had to pay the chapter 13 trustee, and how much you could keep.

I argued that is was “virtually certain” that over five years the cars would get older.  Nope, said Bankruptcy Judge Robert Mayer–the cars will be older but who knows if they need repairs.   (Huh?  I thought everybody knew that.)

If you have to go into Chapter 13, and you have a long commute, how can you avoid certain failure of your chapter 13 plan?  What can you do when your car needs major repairs?

Here are some ideas.

1.  Have four thousand dollars for car repairs already set aside when you go into Chapter 13

2.  Get the boss give you a company car.

3.  Make sure you are driving a new car, with a strong warranty, before you file.

4.  Move closer to work.

5.  Ask the bankruptcy court for permission to buy a brand new car–and then see if someone will finance you while you are still in bankruptcy.  (Alexandria Chapter 13 Trustee Thomas Gorman recently told the Fourth Circuit Court of Appeals that buying a new car in chapter 13 is easy and painless. Brief 5-23-2014   To me, it looks a little harder.)

Here’s my last idea–keep track of all your transportation expenses–gasoline, car repair, insurance, tolls, parking–every year and ask your lawyer to submit them to get a reduction in your Chapter 13 payment.  Each year, here in Alexandria VA, Chapter 13 Trustee Thomas Gorman demands to see your tax returns to see if he can squeeze you for more money.  Maybe you and your lawyer should look at your transportation costs, and annually ask to pay less.

PS  Here’s a good article by Heather McGivern, a Michigan Bankruptcy Lawyer, that talked about this problem in 2011.  She says there are many people who drive to see their bankruptcy lawyer in car that probably won’t last much longer.  And there are many people about to file bankruptcy who need to go out and buy a newer car.  And that some people say your lawyer cannot tell you that.

PPS   I’ve got a hundred thousand miles on my Honda Civic, and it cost me $1500 last month to get it through the safety inspection.  My service rep at the Honda dealer told me it needs new shocks and struts but I should “buy a new car rather than spend any more money on this one.”

 

 

 

Stop foreclosure in Virginia with Chapter 13 Bankruptcy

Posted by Robert Weed / in Blog, Chapter 13 Bankruptcy / No comments yet

Filing Chapter 13 Bankruptcy Woodbridge VA | Law Office of Robert Weed

I’m Northern Virginia bankruptcy lawyer Robert Weed.  I want to talk to you about filing Chapter 13 bankruptcy to stop foreclosure in Virginia.

Before the housing crisis, Chapter 13 bankruptcy was the best way to stop foreclosure in Virginia.  Today, a lot of the time, getting a loan modification is a better way to stop a foreclosure.

Before the crisis, if you got five months behind on your mortgage payments, the banks would send your file to their foreclosure lawyers.  And in the six month, you’d be foreclosed.  Before the crisis, mortgage companies did talk to people about loan mods.

To Stop Foreclosure in Virginia, For Some People Loan Mods Work Great

Now, under government and public pressure, the banks have loan modification and foreclosure prevention programs.  People five or six or eight to ten months, or more, behind on their mortgages can–sometimes–get a loan modification that brings them current, puts the late payments on the end of the loan, and even reduces the monthly payment.

Those programs have helped a lot of people–and they have let a lot of other people down.  The banks have been forced to establish these programs. Forced by public pressure.  Forced by Federal regulation.  Forced by lawyers and judges.   But the banks still run the programs, themselves.  It’s the banks, not a judge or legal authority, where you apply.  It’s the banks who accept you, or turn you down.

(Here are three websites that can tell you about those programs.   HUD–The US Housing and Urban Development Department. The State of Virginia.  And Virginia Housing Development Authority.   You’ll notice all these official websites warn your about scammers–scammers who take your money and make a BS promise to stop foreclosure.)

 

 Why file Chapter 13 bankruptcy?

If the loan mod program don’t work, if time runs out, you need a legal tool to stop foreclosure.  You need a law and a judge on your side.  The law that works to stop foreclosure in Virginia–for thousands of people every year–is Chapter 13 bankruptcy.

(Sometimes Chapter 7 bankruptcy is the tool you need.  I explain that, here.)

How filing Chapter 13 bankruptcy can stop foreclosure in Virginia

Chapter 13 is a bankruptcy repayment plan.  In Chapter 13, you say–and have to show–that you can pay your debts if you have time.  (Having enough time means usually five years, sometimes three.)  Chapter 13 can stop a foreclosure, if you can do two things.  Start paying your mortgage again on time.  And catch it up in five years with catch up payments through the bankruptcy trustee.

Filing a Chapter 13–even the night before a foreclosure–automatically stops the foreclosure.  (It loses its automatic effect if you do it too often.)  To stop it for more than a short while, you have to propose a payment plan.  And to permanently stop it, you have to get the plan approved–and you have to actually make the payments.

When does filing Chapter 13 work best to stop foreclosure in Virginia?

Suppose Chuck lost his job for eight months, got behind on his house, has a foreclosure next week, and is now working again.  Chapter 13 should work great for Chuck.  Since he’s working again, he should be able to afford his mortgage, and he should be able to make his catch up payments, too.

Chuck could not get a loan modification when he was out of work.  Now that he’s working, he doesn’t have time to stop the foreclosure in Virginia with a loan mod.   Chapter 13 can stop the foreclosure.  While he’s in Chapter 13, he can try again to get a loan mod approved.

Now look at Lisa.  Lisa got a graduate degree, and now her student loans are due.  She hoped her degree would get her a better paying job–but so far it hasn’t.  She tried to pay the student loans–and the mortgage.  And she got behind on both.  Lisa got turned down for a loan mod because her other debts were too high.    Chapter 13 can stop the foreclosure.  And it can also put the student loans on hold–so she can afford the mortgage and the catch up.  With the student loans now on hold, Lisa also can try again to get the loan mod.  Then she might use the Chapter 13 to start to pay the student loans.

Using Chapter 13 to stop foreclosure might even work for Lee.  Lee had an adjustable rate mortgage and he started slowly falling behind a couple years ago when it adjusted up.  Now he’s six months behind,got turned down for a loan mod (who knows why?) and foreclosure is scheduled.   He can stop the foreclosure with Chapter 13.  Realistically, he can only afford to carry out his plan for a few months.  As soon as the car needs repair, Lee will start falling behind again.  Maybe in the few months that he can afford the stay in chapter 13, Lee can try again to get a loan mod.  It might be worth a try.

Why Using Chapter 13 bankruptcy to Stop Foreclosure in Virginia often fails:

Five years is a long time.

Antonio and Rose filed Chapter 13 bankruptcy to stop foreclosure in Virginia back 2010.  That worked.  They made their five year Chapter 13 payments for three years.  Then their oldest graduated from high school.  At that point, they split up.  They can’t afford the Chapter 13 payment, can’t afford the house, and don’t really need the house now that the kids are gone.  They’re switching to Chapter 7.  They will let the house go.

The same thing can happen if someone in the family gets sick.  Or gets laid off.  Or if an elderly relative now needs more care.  Or if you get transferred to a distant city.    If  unpredictable life happens during the five year plan, it will probably fail.

Who is the Chapter 13 Trustee and What Does He Do?

If you use Chapter 13 to stop foreclosure in Virginia, you will spend five years having to answer to the Chapter 13 trustee.  In Northern Virginia, the trustee is Thomas Gorman.  He’s had that job since 2008.

When you set up a payment plan in Chapter 13, the person who collects your payments is Thomas Gorman, Chapter 13 trustee.

Besides taking your payments, and paying the money out to your creditors, the trustee has three other big jobs.

First, if your budget doesn’t work, the trustee tells the judge to throw you out of Chapter 13 right away.  If your paystubs and budget show you can’t afford this house and the catch up payment, the Chapter 13 trustee tells the judge there’s no point in giving you a chance.

Second, if you start to fall behind, the trustee tells the judge to throw you out.  Suppose you lose your job and the Chapter 13 trustee doesn’t get your payments.  He asks the judge to throw you out.

Third, the Chapter 13 trustee can ask to increase your payments.  The trustee looks at your tax forms every year, and if you’ve gotten a big raise, he wants it.  (If your plan is catching up the house but only paying part of your other debts, he says now you can afford to pay the other debts, too.)

As part of this, the trustee can sometimes grab your tax refund.  And if somebody dies during the five years and leaves you money, the trustee can go after that, too.

Maybe the Chapter 13 trustee also is supposed to operate a system that helps people succeed. (See 11 USC 1302(b)(4)) For many Chapter 13 trustees, that’s low on their priority list.

Problems with filing Chapter 13 bankruptcy

What are the problems with filing Chapter 13 bankruptcy?  Obviously the biggest problem is that you have to make the payments.

Second, here in Northern Virginia, the Chapter 13 trustee almost always puts a garnishment on your pay.  Lots of people want to promise they will make the payments faithfully, but the Judge here wants Chapter 13 trustee wants to be first in line.  People are afraid they are embarrassed with the HR Department at work.  (Actually the HR department probably has a lot of these.  And a chapter 13 payment plan should be a lot less embarrassing than getting garnished on an unpaid bill.)

Third, the Chapter 13 trustee often wants more money.  Sometimes, depending on your budget, we can start with a Chapter 13 plan that only pays your catch up payment.  In other words, we can start with a plan that leaves the student loans until later and wipes out your credit cards and medical bills.  Then if you get a raise, the Chapter 13 trustee wants more money so the credit cards get paid, too.  The Chapter 13 trustee here in Northern Virginia has gotten very aggressive about doing that.

When the Chapter 13 trustee says you can afford more money, it’s tough to get him to take into account the things you need that money for.  After two or three years, maybe you’ve gotten a raise.  In the same two or three years, the cars are older and need bigger repairs.  The house is older and it needs work, too.   And inflation has probably raised your grocery bills.  When the trustee asks for more, your lawyer can fight back.  But the trustee wins a lot.

Conclusion:  Many people will use Chapter 13 to Stop Foreclosure in Virginia

A lot of people in Northern Virginia have gotten through the worst of the housing crisis.  The value of your house may be back near what you paid for it.  That means you have more incentive to try to keep it.  (And the banks lose less money if they foreclose.)

But while the housing crisis is most over, the recession really isn’t.  Most people are making less than they were, and few have gotten raises.

I expect that means more and more people will need to stop foreclosure in Virginia.  If the loan mod process doesn’t work, Chapter 13 can be the way to go.

I’m Northern Virginia bankruptcy lawyer Robert Weed.  I have offices in Annandale, Stafford, Sterling and Woodbridge.  Serving Fairfax, Loudoun, Prince William, and all of Northern Virginia.  If this applies to you, please make an appointment for a Chapter 13 consultation.   If you need to stop foreclosure in Virginia, I hope to see you real soon!

 

If you don’t live in Northern Virginia, you should look at NACBA.

 

 

 

 

 

 

Chapter 13: Don’t get disqualified at the finish line

Posted by Robert Weed / in Chapter 13 Bankruptcy /

Have you made all your payments under your Chapter 13 plan?  You can still lose your discharge—unless you file your §1328 Certification.

Why is that?  You cannot get a chapter 13 discharge if you were one of the people who caused the housing crisis back in 2007 and 2008.  Or if you’ve been convicted of bank fraud.

You also can’t move into Virginia just to claim the Virginia homestead exemption.  (This will NEVER apply here, because our $25,000.00 homestead is one of the worst in the country.)

You have to have taken the required classes.  And you can’t be too close to a previous bankruptcy.

These last are easy for the bankruptcy court to look up.

But the bankruptcy court has no way of knowing whether you are current on your support.  Or whether you stole money from the bank bailout.

So, they ask you to swear to it.

In the Eastern District of Virginia, there’s a local form, that you need to file.  Here’s that form, here.  Or 1328 certification

You have to file this form, or your bankruptcy is closed without a discharge.

If you haven’t already, download and sign it.  Scan and email to [email protected]

Thanks!  The long Chapter 13 marathon is over.

After Bankruptcy: Bank of America Can’t Stop Themselves

Posted by Robert Weed / in After Bankruptcy, Chapter 13 Bankruptcy / 13 comments

This is a story about how Bank of America violated the bankruptcy discharge, hacking off Gus and Nikoleta, and me.  (I’ve changed the names of Gus and Nikoleta–all the rest of this is true.)  And then hit Gus and Nikki for a “foreclosure fee” while they were current.  And then did it again.

Gus and Nikoleta came to see me in 2009.

Gus and Nikki had been through tough times and they were behind on the mortgages.  They had a first and a second, both with Bank of America.  They were fifteen thousand behind on their first mortgage and Bank of American was about to foreclose.