Can My Chapter 13 Bankruptcy Payment Change?

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The bankruptcy law allows Chapter 13 bankruptcies to last anywhere from three to five years. If you are required to file a Chapter 13 bankruptcy because you do not pass the Means Test, then your Chapter 13 repayment plan is required to be for 60 months, unless you can afford to repay 100% of your unsecured debt in less than 60 months.

Often, Chapter 13 bankruptcy debtors are apprehensive of their Chapter 13 payment for fear that over the course of three to five years, their job situation may change. It is common for people to ask, “Will my Chapter 13 payment change during my bankruptcy?”

There are two ways to answer this question:

1) Whether your Chapter 13 payment will increase during your bankruptcy, and

2) Whether your Chapter 13 payment will decrease during your bankruptcy.

Bankruptcy Questions

First, let’s discuss whether your Chapter 13 payment will increase during your bankruptcy. The bankruptcy Trustee has the ability to examine your pay stubs, bank statements, and tax returns at any time during your bankruptcy. Usually, the Trustee will do a review of your case annually. If, for example, you receive a major pay increase during your bankruptcy, the Trustee may increase your plan payments to reflect your new income. Sometimes, your Chapter 13 payment is arbitrarily increased by the Trustee to ensure that enough money is being paid for the Trustee to pay all of your secured debts (house, car, furniture, etc).
Now let’s discuss whether your Chapter 13 payment will decrease during your bankruptcy. If your pay decreases significantly, it is sometimes possible to file a motion with the court to modify your plan payments. Your attorney will be able to discuss your options with you if you suffer a job loss or a major pay decrease. Whether a plan payment can be decreased depends on the specific facts of the case – for example, how much debt is owed, how much is owed to secured creditors, how much is owed in taxes, etc.

The bottom line is that you are usually not locked into your Chapter 13 payment – if your income significantly increases or decreases, there is a chance that your Chapter 13 payment can or will be modified to reflect the change in income. However, you will need to speak with your bankruptcy attorney about the specifics of your case.

What If I Stop Receiving Mortgage or Car Statements After Filing for Bankruptcy?

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Once you file a bankruptcy, an automatic stay goes into effect.  This automatic stay states that no creditor can try to collect any debt from you; according to statute 11 U.S.C § 362 (6), “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title”.   If a creditor does contact you with payment demands, a Charlotte bankruptcy lawyer or Greensboro bankruptcy lawyer can file what’s known as a “motion for sanctions” which reprimands the creditors attempting to collect the debt.

Bills in Mailbox

Even though you are current, and are going to keep your house or car; many creditors will still not send you a bill once you have filed the bankruptcy.  Ever heard the phrase, “better safe than sorry”?  Well, this is exactly why you are not receiving your statements now; they do not in any way want to violate the automatic stay.  If you had set up automatic bill pay, this will likely stop as well.  You just have to remember regardless of whether you receive a bill, you must continue to make your house or car payment!  If not, the creditors have the legal right to foreclose on your home or repossess your vehicle.

What can you do?  Simply call them and request that they still continue to send you your statements.  They may send something to your bankruptcy attorney asking for he/she to sign off to give permission for you to resume receiving statements for their records, but in most cases, it is as simple as that.  Again, the main reason a creditor stops sending you statements is because they do not want those statements to be viewed as an effort to collect a debt which would violate the automatic stay that goes into effect when your bankruptcy is filed.

What if I Accidentally Leave a Creditor Off of My Bankruptcy?

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Under the stress of a bankruptcy filing, there are times when a creditor is inadvertently forgotten and left off of a bankruptcy filing. If you file Chapter 7 bankruptcy or Chapter 13 bankruptcy and realize that you accidentally left a creditor off of your bankruptcy, it may not be too late.

Bills in MailboxIf you realize before your creditors’ meeting that you have omitted a creditor, you will need to contact your attorney immediately. Generally speaking, you can add a creditor before your creditors’ meeting. Your attorney may charge a small fee and the court will charge a filing fee, but for most debtors these fees are insignificant compared to the amount owed to the omitted creditor. Your attorney will also send out the proper notices to the omitted creditor after the creditor has been added to the bankruptcy filing.

If you realize after your creditors’ meeting that you have omitted a creditor, there are more strict time limitations to adding a creditor and you will need to contact your attorney immediately to determine whether or not the time frame for you to add a creditor has lapsed.

The most important way to avoid accidentally omitting a creditor from your bankruptcy prior to the filing of your petition is to double-check your credit report from each of the three main credit reporting agencies: Equifax, TransUnion, and Experian (visit www.AnnualCreditReport.com to get your free credit report). You will also want to double-check your bills from your creditors to make sure that you have included all of your debts on your bankruptcy petition.

How Much Debt Can I Have When I File for Bankruptcy?

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Every potential bankruptcy client has a different amount of debt owed. Even the type of debt varies from debtor to debtor – some debtors have almost all credit card debt, while others may have almost all medical bills. A common question that potential bankruptcy clients have is whether their bankruptcy will be denied by the Court if they owe “too much money.”

For potential Chapter 7 bankruptcy clients, there is not a specific limit to the amount of debt that can be owed. However, the Bankruptcy Court will always do an analysis in each case to examine the amount of household income in relation to the amount and type of debt owed to ensure that the debtor is not abusing the bankruptcy system.

Bankruptcy InformationFor potential Chapter 13 bankruptcy clients, there are some limitations to the amount of debt that is allowed. Under Section 109(e) of the Bankruptcy Code (also known as the federal bankruptcy laws), an individual with regular income cannot owe more than $250,000.00 in unsecured debt and $750,000.00 in secured debt. In some bankruptcy courts, the bankruptcy Judge will hold a hearing for confirmation of your Chapter 13 Plan if there is more than $100,000.00 in consumer debt (credit cards and personal loans). These limitations are set to ensure that the debtor is not abusing the bankruptcy laws.

One way to avoid having issues with the amount of debt you owe is to stop using your credit cards as soon as you consider filing bankruptcy. In some cases, the Court may ask you when the last time you used your credit cards was. The Court asks this question to make sure that you did not run up your credit card charges immediately before filing bankruptcy.

You should contact a Charlotte bankruptcy attorney or Greensboro bankruptcy lawyer to get a more specific analysis of your own situation, but you can use these general guidelines to prepare yourself for whether or not the court will deny your bankruptcy if you owe “too much money.”

Will Bankruptcy Stop Creditor Phone Calls and Harassing Contact?

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Yes, once a person has case number after filing either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, a creditor is prohibited from trying contact the debtor in any attempt to collect a debt.

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Can I Get Fired From My Job For Filing Bankruptcy?

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The short answer is, no. Federal law prohibits an employer to discriminate against you for your declaring bankruptcy. According to 11 U.S.C § 525 (a) and (b), no governmental unit or private employer may “…terminate the employment of, or discriminate with the respect of employment someone who is or has been a debtor under this title…” In other words, you can’t be fired from your job simply because you have filed for bankruptcy.

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Can I Eliminate a Second or Third Mortgage by Filing Bankruptcy?

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If you are like many people, your home is not worth what it was a few years ago.  With the downturn of the economy, the value of your house has decreased.  Suddenly, you are “upside down” on your home and the sales price is not enough to pay off the first, second and sometimes third mortgage on your home.

Foreclosure of House | Charlotte & Greensboro Bankruptcy Lawyers

When the real estate market was strong, many people capitalized on the fact that their home was worth more than their first mortgage and obtained second and even third mortgage loans against their home.  Often this money was used to pay off credit cards or medical bills, and in some cases it was used to update or upgrade the home.  Regardless, the house is not worth what you owe on it today, and there is no way for you to sell the home without a short-sale or possible deficiency balance.

If the value of your home is less than what you owe on your first mortgage, you may be able to file Chapter 13 bankruptcy in a North Carolina bankruptcy court and “strip” the lien of the second mortgage.  In other words, if you file Chapter 13 bankruptcy you may be able to either file a lawsuit (adversary proceeding) or file a Motion to Value Realty and eliminate a great deal, if not all, of the amount owed on the second and/or third mortgage.  Obviously, the mortgage company has the right to argue the value placed on the property.  However, if you have obtained a market assessment by a licensed real estate agent or an appraisal by a licensed appraiser, it will be more difficult for the mortgage company to argue the value.

The adversary proceeding or Motion to Value Realty must be filed in addition to your Chapter 13 bankruptcy case.  For the lien of the second and/or third mortgage to be “stripped” or voided, you must have a bankruptcy court order canceling the lien on the second and/or third mortgage and you must receive a discharge in your Chapter 13 bankruptcy.

If you have questions on how you may be able to “strip” a lien on your home by filing Chapter 13 bankruptcy, please do not hesitate to contact us.

Should I Stop Using Credit Cards If I’m Going to File Bankruptcy?

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Generally speaking, yes. It is not mandatory to stop using your credit cards before filing for bankruptcy but you should use them wisely and, ideally, you should stop using them. If charges to your credit cards have been made to purchase luxury items within 180 days prior to you filing the bankruptcy you would need to wait to file.

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What to Expect at the Creditors’ Meeting

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Whether you are filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, you will be required to attend a creditor’s meeting (also known as a 341 Meeting of Creditors). The Court schedules the date and time of your creditors meeting after your bankruptcy has been filed and a bankruptcy Trustee has been assigned to your case.

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