Category Archives: Chapter 13 Bankruptcy

How Can I Get My Chapter 13 Plan Confirmed?

By Ryan C. Wood

If you are filing for Chapter 13 bankruptcy protection you must also file a Chapter 13 Plan. The Chapter 13 plan will tell the court and all interested parties (such as the Chapter 13 trustee and your creditors) what you intend to do in your Chapter 13 case. The plan will provide for how long the Chapter 13 bankruptcy case will last, if you are reducing or “cramming down” the secured debt of a car to its fair market value, if you plan on stripping a junior lien on a house, if you need to pay back mortgage arrears, whether you are surrendering the collateral of a secured debt (such as a house or car), what percent your unsecured creditors will be paid and anything else you want to have done in your Chapter 13 reorganization case.

Your bankruptcy attorney will be working with the Chapter 13 trustee to make sure that your plan is confirmable (approved). It is the trustee’s job to take your Chapter 13 plan payments and disburse the funds according to the terms of your Chapter 13 plan. If there are issues with the plan payment, secured debt amounts, interest rates, payment percentages to the unsecured creditors, or any other terms of the plan, the Chapter 13 trustee will object to the confirmation/approval of your plan. Any of your creditors may also object to the confirmation of your plan as well if they do not agree with the terms you set forth in the plan. You may amend your Chapter 13 plan prior to confirmation if you need to change some of the terms, such as if the value to a car needs to be changed (based on negotiation between your bankruptcy lawyer and your car lender), or the amount of mortgage arrears (missed payments) is different than what is listed in the plan. If all issues are resolved with your creditors and trustee, the trustee can recommend to the court that your Chapter 13 plan be confirmed. The Chapter 13 plan you file with the court is only “proposed” until the bankruptcy court confirms/approves your Chapter 13 plan.

Once your Chapter 13 plan is confirmed you need to comply with the terms you set forth in the proposed Chapter 13 plan. Pursuant to 11 U.S.C. §1325, the bankruptcy court will confirm your Chapter 13 plan if: 1) it is proposed in good faith, 2) you are able to make all the payments proposed in the plan, 3) your unsecured creditors receive as much in your Chapter 13 plan as they would have if you filed a Chapter 7 case, 4) your secured creditors accept their treatment in your plan, 5) you file all applicable tax returns as required before your meeting of creditors and on time every year thereafter, and 5) if you comply with the terms of the plan.

One of the biggest factors in the determination of whether to confirm your Chapter 13 plan is feasibility. The Chapter 13 plan needs to be feasible or reasonably possible. In other words, you need to have the ability to pay what you propose in your plan. One example is if your plan proposes to pay $400 a month in your Chapter 13 plan but you only have $100 available after paying all your necessary expenses such as rent/mortgage, utilities, food, gas, insurance. How can you pay $400 a month in a plan if you only have $100 left over each month? The plan will be denied confirmation because it is not feasible or possible. To show that the plan is feasible you have to prove that the plan has a reasonable likelihood of success. One of the ways you can do so is to show that your income and expense schedules (Schedules I and J) provide the necessary disposable income to pay the Chapter 13 plan payment. For the example above, your plan may be feasible if your Schedules I and J reflect a disposable income of $400 to pay your Chapter 13 payment. Note that the plan only has to show that it has a reasonable likelihood of success. It does not have to prove that the plan is guaranteed to be successful. In re Anderson, 18 B.R. 763, 765 (Bankr. S.D. Ohio 1982). The bankruptcy court’s determination of feasibility should be based upon the facts before the court at the time of confirmation rather than hypothetical scenarios. In re Anderson, 18 B.R. 763, 765 (Bankr. S.D. Ohio 1982).

Another important factor in the determination of whether your Chapter 13 plan can be confirmed is the good faith requirement. Good faith is looked at on a case-by-case basis and takes all factors into account. You want to be sure that all your creditors are being treated fairly and that you are paying all of your disposable income into the plan.

In conclusion, if you propose a plan that satisfies the Chapter 13 trustee and the creditors, you can afford to pay the monthly payment every month, your creditors are being treated fairly, your case was filed in good faith, and you comply with the terms of your Chapter 13 plan, you will have a high likelihood of having your Chapter 13 plan be confirmed.

New San Francisco and Oakland Divisions Model Chapter 13 Plans

By Ryan C. Wood

The Chapter 13 Plans for the Oakland and San Francisco Divisions of the Northern District of California have undergone a significant makeover. The Oakland and San Francisco Divisions are using a new Model Chapter 13 Plan effective August 1, 2013. The Oakland Division’s Chapter 13 Plan went from being a one page plan to a five page plan. Oakland is the division with the biggest change in terms of the way the plan looks, but the way the Chapter 13 plans are administered have not significantly changed. The San Francisco Division has about the same amount of pages but the Chapter 13 plan has been reorganized.

An important reason to hire a bankruptcy attorney is to make sure the process is completed correctly and part of that is using the correct forms.  The forms do in fact change from time to time.  Most of us bankruptcy attorneys use software to draft the bankruptcy petitions and receive regular updates to make sure the proper forms are being used.  This is a question you should ask your attorney about.  Do you use a software to prepare bankruptcy petitions.

The new Model Chapter 13 Plans for the Oakland and San Francisco Divisions are laid out and organized by classes. Class 1 is for secured claims that have arrears. This is where you would include your mortgage arrears if you want to pay them back in your Chapter 13 plan. Class 2 is for secured claims that are being modified in your Chapter 13 plan. This is where you would include a vehicle that you are “cramming down” to its fair market value or junior liens that are wholly unsecured. You should consult with bankruptcy attorneys if do not know what this means and you think that this may be beneficial to you. Class 3 claims are for secured claims in which you are surrendering the collateral. If you want to surrender your vehicle or house for whatever reason this is where you would include that claim. Class 4 claims are for secured claims that you are current on and what to pay directly to the creditor. A bankruptcy lawyer can explain to you the significance of either paying the claim through the Chapter 13 plan or paying the claim directly to the creditor outside the plan. The benefits of each one are dependent on your particular circumstances. Class 4 is also where you would include claims you are trying to obtain a loan modification for. If you are in the process of obtaining a loan modification for your mortgage and you want the arrears to be taken care of as part of your loan modification, then you would include them in Class 4. Class 5 is for unsecured priority claims. This is where you would include the claims you owe to the taxing authorities like the Internal Revenue Service and Franchise Tax Board. These are the taxes that are non-dischargeable. You would also include any child support or alimony arrears or other claims that are considered a priority claim. If you do not know what is considered a priority claim, contact an experienced bankruptcy attorney for guidance. Class 6 claims are designated for unsecured claims that would be pain in full even if the other nonpriority unsecured debts are not. You are essentially saying that the creditors in Class 6 deserve special treatment and you would need to indicate why they should have special treatment. Lastly, Class 7 claims are for all other unsecured nonpriority debt. This is where the claims for your credit card debt, medical bills, personal loans, and other unsecured debt would be listed.

The new Model Chapter 13 Plans for the Oakland and San Francisco Divisions may take some getting used to, but be sure to use the correct plan or it can be rejected by the court and you would need to file a new one. Chapter 13 bankruptcies are normally more complicated and it is highly recommended that you retain experienced bankruptcy attorneys to help you through the process.

AS OF DECEMBER 1, 2017, A NEW MODEL PLAN WAS APPROVED BY THE FEW HUMANS TAKSED WITH THIS FOR THE NORTHERN DISTRICT OF CALIFORNIA AND NOW WE HAVE A DISTRICT WIDE PLAN THAT MUST BE USED. THE MODEL CHAPTER 13 PLAN IS THE SAME IN THE OAKLAND DIVISION, SAN FRANCISCO DIVISION, SAN JOSE DIVISION AND SANTA ROSA DIVISION FOR THE NORTHERN DISTRICT OF CALIFORNIA. OF COURSE THE ADMINISTRATION OF THE “MODEL PLAN” IS DIFFERENT GIVEN THERE ARE DIFFERENT TRUSTEES AND DIFFERENT JUDGES. RESULTS CAN VARY WIDELY DEPENDING UPON THESE HUMAN FACTORS.

Information About Filing a Chapter 13 Bankruptcy Case

By Ryan C. Wood

When people think about Chapter 13 bankruptcy cases, most people think that it is the bankruptcy chapter under which they are forced to pay all their debts back and are stuck with the payment for the duration of the Chapter 13 plan.  It is information like this that sometimes prevents people from seeking the advice about bankruptcy.  This article was written to provide you with more information and insight into Chapter 13 bankruptcy cases.

Do I Have to Pay Back All My Creditors?

Many people do not seek the advice of bankruptcy attorneys because they think that they have to pay back all their debts in a Chapter 13 plan.  This is not always the case.  The amount you pay in a Chapter 13 plan depends on a variety of factors such as: your monthly disposable income, if there are any unprotected assets and the amount of missed secured debt payments (such as mortgage or car payments).  Some people pay back 0% of their unsecured debts while others must pay 100% of their unsecured debts.  It just depends on your financial circumstances.

Why Should I File a Chapter 13 Bankruptcy?

There are many reasons why people file a Chapter 13 bankruptcy.  One of the most common reasons to file for a Chapter 13 bankruptcy right now is the ability for consumers to strip, or get rid, of their junior liens from their real estate.  For this to be possible the value of your property must be worth less than what is owed on your first mortgage.  With the current economy there are a lot of underwater mortgages out there that can be removed forever.  Consumers can strip their home equity lines of credits or other junior liens that may range anywhere from $10,000 to $200,000+.  That is a substantial amount of savings.  Another reason to file a Chapter 13 bankruptcy is to save a home from foreclosure by paying back missed mortgage payments in the Chapter 13 plan.  This allows the missed mortgage payments to be spread out in the Chapter 13 plan over 3 to 5 years instead of having the entire amount payable immediately.  A third reason to file a Chapter 13 case is to repay priority tax debt in the Chapter 13 plan.  Generally taxes that are not more than three years old are not dischargeable in bankruptcy, a Chapter 13 plan allows them to spread out that payment for 3 to 5 years.  These are just a few of the reasons to file a Chapter 13 bankruptcy case.

Am I Stuck in a Chapter 13 Plan for the Duration of the Plan?

Circumstances can change at any time.  Fortunately, Chapter 13 bankruptcy cases are fairly flexible.  If your financial situation changes, such as loss of job, decrease in income, increase in expenses, or any other change, you can always modify your Chapter 13 plan to reflect the changes in your financial situation.  If the changes are significant enough you may even convert your Chapter 13 bankruptcy case to one under Chapter 7.

Can I Voluntarily Dismiss My Chapter 13 Plan?

There may be many reasons why you would want to dismiss your Chapter 13 plan.  Luckily, under 11 U.S.C. §1307, you can voluntarily dismiss your Chapter 13 plan at any time as long as you have not previously converted your case from a Chapter 7, 11, or 12.  Chapter 13 cases are usually fairly complicated and it is recommended that you seek the advice of an experienced attorney to help you navigate through your Chapter 13 case.