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Second Bucks County Chapter 13 Bankruptcy Scenario:
A single Debtor was laid-off about two years ago and accumulated some credit card and personal loans debt. Debtor has no real property or other unexempted assets. Debtor has a paid-off vehicle, household furniture, electronics and other items that will be exempt under the available exemptions and retained by Debtor. Debtor was unable to find a replacement employment and became an independent contractor, an installer, therefore receiving a 1099 self employment income.
Chapter 13 Bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. It acts as a glorified “consolidation repayment” plan.
Debtor can catch up on the delinquent mortgage, auto loan, non-dischargeable taxes and child support and other domestic support obligation.
Debtors can still get discharge of debts, and can even discharge some debts that are normally not dischargeable in Chapter 7. This is called a “super discharge.” An example of the super discharge, is discharge of tax penalties and other types of penalties.
Debtors can modify secured obligation by cramming down liens to the value of the collateral. For example, a vehicle that was purchased 4 years ago and is substantially “under water” can be crammed down to the fair market value of the collateral. Wholly unsecured liens can also be stripped and discharged as regular unsecured debts.
Unexempted property, i.e. property in excess of the available exemptions, can be retained by Debtors, as long as at least the value of the collateral is paid to the creditors.
Chapter 13 Debtors can continue operating their business and use their income for purposes of making Chapter 13 payments. If debtors lack a stable income or otherwise unemlpoyed, they can rely on contributions from their spouses or other family members to pay their bankruptcy plan payments.
Any individual, even if self-employed or operating as an unincorporated business, is eligible for Chapter 13 Case, as long as the individual's unsecured debts are less than approximately $394,000 and secured debts are less than $1,184,200. These amounts are adjusted periodically to reflect changes in the consumer price index.
Foreclosures, garnishments, repossessions can be stopped immediately upon the filing of the petition. Debtors can file a “bare-bone” emergency petition to stop the imminent foreclosure of the Debtors’ primary residence or investment real property.
Payment plans are from 3 to 5 years, depending on the income of the debtor’s household income. However, a below-median income debtor can still propose a 5-year plan to reduce their monthly payments to the minimum. 5 year plans can also benefit Debtors who are trying to pay off their car loans or other secured obligations and obtain a vehicle with a lien-free title.
As the result of the self-employment, Debtor failed to set aside income taxes and now owed the IRS a substantial sum of taxes. Debtor want to discharge his credit cards and personal loans and also pay beck his back taxes and avoid garnishment, liens and other collection actions by the creditors and the IRS.
Debtor can propose a Chapter 13 payment Plan, discharging the unsecured debt and paying back the priority taxes. Debtor will retain all his property and possessions.
Third Common Bucks County Chapter 13 Bankruptcy Scenario:
One of the common Bucks County Chapter 13 Bankruptcy Scenarios:
A married Debtor with 3 children and a primary residence, a house, with approximately $25,000 of equity. Debtor has full-time employment with regular income below $100,000 gross per year. Debtor fell behind on his Mortgage payments, lost their foreclosure case and the debtor’s house is placed on the Bucks County Sherriff’s sale list. The sale is scheduled sometime next week. Debtor seeks to stop the foreclosure proceedings and the sheriff sale and catch up on his mortgage.
A married Debtor with 1 child and a primary residence, a house, with approximately $50,000 of equity. The Debtor’s house was inherited from his deceased parents. Debtor has full-time employment with regular income below $40,000 gross per year. Debtor failed to pay property taxes for about a year and the house was scheduled for tax sale sometime next week. Debtor seeks to stop the sale and pay back the tax delinquency.
Debtor can file Chapter 13 Bankruptcy case and, as long as the case is filed before the actual sale of the property, the sale will be stopped. Debtor can propose a payment plan and as long as the plan confirms with the applicable requirements of the Bankruptcy code, can catch up on the mortgage payments and retain the property.
Debtor can file Chapter 13 Bankruptcy case and as long as the case is filed before the actual sale of the property, the sale will be stopped. Debtor can propose a payment plan and as long as the plan confirms with the applicable requirements of the Bankruptcy code, can catch up on the mortgage payments and retain the property.
Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors, called a 341 meeting. Generally, the debtor can avoid problems by making sure that the petition and plan are complete and accurate, and by consulting with the trustee prior to the meeting.
Debtor must make its first Payment Plan within 30 days from the filing of the petition.Sometime after, bankruptcy court will review bankruptcy plan and unless a creditor or a Chapter 13 trustee objects to any provision of the Chapter 13 Plan, the Plan will be confirmed by the court. Once confirmed, the Plan and its provision is binding on the creditors and Debtors. Depending on the district and the circumstances of the case, Debtors can expect their case confirmed within 3-5 months after the filing of the petition. If the case cannot be confirmed, it will be dismissed. Case can also be dismissed for a failure to provide documents, make payment(s) or other good reason. If debtors abuse the bankruptcy court or if debtors are repeat filers in bad faith, bankruptcy courts can even prohibit future filings and dismiss bankruptcy cases with prejudice.