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FiveStarLaw
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience:  Bankruptcy Lawyer. Experienced.
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I need to file a chapter 13 plan for someone who has no disposable

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I need to file a chapter 13 plan for someone who has no disposable income. It's actually a minus $2K. The person has a house and car they want to keep - house $460,000, arrearage $25K. Car worth $5K, but owes $27K in arrearage. Income is $6,300 p/m, with expenses at $7,500 because mortgage is $3,568 and car payment is $695. Taxes owing are $12K, no cc debt. How can I draft a plan with payments on these figures?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  FiveStarLaw replied 6 years ago.

Hello,


Thank you for your question. I am happy to assist you.


You can draft the plan using income supplied by a third party such as a parent or friend. For example, if a parent is willing to pay $500 per month toward the plan, you would include the $500 as other source of income.


I hope that the information which I provided was helpful to you.


Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.


Thank you,
Customer/span>


Please click ACCEPT so that I can get credit for my work

Bonus and Positive Feedback gratefully accepted!


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 6 years ago.
Where do I put that information on the plan? I've already filed the petition that states the income is a certain amount. I am using the Chapter 13 plan form supplied by the Central District Court, Orange County, CA. And how do I verify that the parent or friend will make the payments to the debtor? I'm worried that the commissioner will look at the plan and see that the debtor is way over stretched and reject it. What about the car payment, can it be crammed down? Thank you.
Expert:  FiveStarLaw replied 6 years ago.
Hello,

If there is not sufficient income, the court will not confirm the plan. The debtor will then have to choose to convert to a Chapter 7 bankruptcy or have the Chapter 13 dismissed.

If the debtor's friend will be assisting with the payments, it simply needs to be listed on the income schedule as income.

You may be able to do a cram down on the car.

I hope that this information has helped you.


If I can be of assistance in the future, please ask for .


Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

Customer: replied 6 years ago.

But I already filed the schedules that did not list any extra income from a friend. Do I file an amended income schedule along with the plan?

 

I realize you are spending your time and answering more than one question for me. I really appreciate it and I will pay more than the $15.00.

 

I need to get the papers filed in a few days to meet the deadline and I'm stressed about it because I don't want it to be rejected. I don't think going to a Chapter 7 would work because they would lose the house. They have virtually no unsecured debt, it's mainly the house payment, arrearages, car payment, arrerages and the taxes. Are there any examples of how to work it you could direct me to? Or any case studies I could model on? Thank you very much. CJ

Expert:  FiveStarLaw replied 6 years ago.
Hello,

File an amended income schedule and plan. Simply redo those pages and file it along with the fee for an amendment..

If a friend is not going to help fund the plan or they do not have the finances to fund the plan, it is not to their advantage to file the plan as it will only increase the arrearages when the plan is dismissed for nonpayment.

Remember that they must have their first payment with them (cashier's check) at the 341 hearing or the plan will not be confirmed.


I hope that this information has helped you.

If I can be of assistance in the future, please ask for .

Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you
Expert:  FiveStarLaw replied 6 years ago.
I will be back on line in 2 hours.
Customer: replied 6 years ago.

Don't we have to file a Plan? I thought it was required?

 

Are you saying if we don't file a plan, the case will automatically be dismissed?

 

Can you give me any guidance on crafting a plan so they can keep their house? If we show a friend or someone will help with payments, would that be accepted?

 

Is it possible that the mortgage lender will re-do the loan? The house is now worth about $50,000 less than what is owed.

 

I know I have many questions and I do thank you for your time and expertise.

 

 

Expert:  FiveStarLaw replied 6 years ago.
Hello,

Don't we have to file a Plan? I thought it was required? File an amended income schedule and plan as per my previous answer.

Are you saying if we don't file a plan, the case will automatically be dismissed? Yes you must have a plan and the first payment under the plan.

Can you give me any guidance on crafting a plan so they can keep their house? If we show a friend or someone will help with payments, would that be accepted? No plan will work unless they have disposible income to fund it. You can use income from a friend or someone.

Is it possible that the mortgage lender will re-do the loan? The house is now worth about $50,000 less than what is owed. You can try to treat the 50K as unsecured debt.

Please accept my answers that have been helpful thus far. You can ask additional questions at that time.


Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 6 years ago.

I just accepted the answer and thought I put in a bonus for $25.00 for you. I'm not sure if it showed up going to you or not.

 

You have been very helpful and I feel better prepared to start drafting the plan. If I have further questions, would it be possible to chat at some point?

 

Thanks very much,

 

Christina

Expert:  FiveStarLaw replied 6 years ago.
Hello,

Thank you for the accept and thank you for the bonus. I appreciate it. You can ask for me if you have additional questions. To do so start your question with "FLAandNYLawyer" in the question box. Good luck.
Customer: replied 6 years ago.

Would you be in a position to view the plan I draft and let me know if there any parts I've left out? I would not ask you to verify that it will be accepted, but just to let me know if I've filled in all the right boxes and set out a reasonable payment schedule.

 

I will also amend the income statement to add money coming in from a friend or maybe the debtor's mother. The Current Monthly Income and Calculation of Commitment Period and Disopsable Income does show a -$2459 in No. 59 - Monthly Disposable Income Under Section 1325(b)(2). That's what is worrying me. Thanks again.

Expert:  FiveStarLaw replied 6 years ago.
Yes. If you do not want to post the info for the public to see you can contact the site administrator and tell her that you would like her to forward something to me.
Customer: replied 6 years ago.

That's great - I will work on the plan and send you something tomorrow to look over.

 

I guess I'd better ask if you are working tomorrow?

 

Thanks again,

 

C

Expert:  FiveStarLaw replied 6 years ago.
Hello,

Yes, on and off all day. Post me a note here on this thread so that I know to look for it.
Customer: replied 6 years ago.

How I contact the site administrator? Is there a phone number?

 

Thank you.

Expert:  FiveStarLaw replied 6 years ago.
You can email them at: info@justanswer.com
Customer: replied 6 years ago.

I just had the site admin send you 3 attachments. After you review them, please let me have your opinion and what I need to do to fix them.

 

I think I am in over my head with this thing, but hopefully with your help I can get it filed with the court and ease my friend's minds about losing their house.

 

Thank you.

 

CJ

Expert:  FiveStarLaw replied 6 years ago.
OK- I will go retrieve the attachments and get back to you ASAP.
Customer: replied 6 years ago.
I don't think it worked - I got a return message saying the files did not go through.
Expert:  FiveStarLaw replied 6 years ago.
Just now came through. I will work on it now.
Expert:  FiveStarLaw replied 6 years ago.
Hello,


If you are not an attorney, you should not be preparing the petition for the debtor.


That said, there are a few items:
1. IRS needs to be paid in full:
2. Litton Mortgage arrearage needs to be paid in full in this is a first mortgage.
3. As per your initial question the car is worth 5K and loan is 27K. You need to indicate claim total of 27K, secured amount 5K and pay the 5K in full over the life of the plan to cram down.
4. You need to take out taxes on the monthly 7K income
5. Annual property taxes and insurance are not accounted for.


You need to account for the assets of the business since it is not incorporated. If it is incorporated, the share in the corporation have value that should be indicated.


It does not appear that these people will be able to adequately fund the plan. You would not be doing them a service by putting them into a Chapter 13 that is doomed to fail.


Please accept and then you can ask additional questions. We did not discuss price so whatever you are comfortable paying, you can add as a bonus.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 6 years ago.

Are you saying they should go to a Chapter 7 instead of a 13?

 

I did tell them that a Chapter 13 was a repayment bankruptcy for people who have regular income, which they have. The problem is their mortgage is way too high for them to manage. I did tell them that as well. Would you give me some guidance as far as what other options they may have?

 

I think their main idea in filing for bankruptcy was to buy time to pay on the mortgage and not lose the house, but I have thought myself that it may not be possible to do that unless they have a lot more income coming in or the mortgage is recalculated somehow. I think they thought the lender might want to negotiate when they see they are filing bankruptcy.

 

I would not do anything illegal or unethical - it is acceptable in California for someone who is not an attorney to assist with filing the petition for the debtor. But, I also understand that this is very complicated and an attorney's knowledge and experience is needed.

 

Thanks again for your assistance.

 

CJ

Expert:  FiveStarLaw replied 6 years ago.
Hello,

Thank you for the accept and the bonus. I appreciate it.

I am concerned that I do not have a clear picture of what assets they have. For example, are the business assets reflected. On page 5 it indicates that there would be no assets for distribution in a Ch 7.


A couple questions:
Is the mortgage on the house the original mortgage or did they refinance?
Have they attempted to renegotiate with the lender?
Customer: replied 6 years ago.

Certainly - I'm happy to pay you for your time and expertise.

 

There are really no assets - they operate a cleaning service. I mean, they have some vacuum cleaners and cleaning supplies, but that's about it. They have monthly contracts and pretty much bring in about $7,000 a month gross. From that they pay about $700 out to helpers.

 

The mortgage is the original one, dates from October 2006 in the amount of $480,000. Yes, they have tried to renegotiate with the lender.

 

Would it help you to see any more of the schedules or statements in the petition package?

 

Expert:  FiveStarLaw replied 6 years ago.
Hello,

There are really no assets - they operate a cleaning service. I mean, they have some vacuum cleaners and cleaning supplies, but that's about it. They have monthly contracts and pretty much bring in about $7,000 a month gross. From that they pay about $700 out to helpers.

The monthly contracts may be a valuable asset. The supplies would need to be listed as well. The trustee may go through the business records and bank statements.

 

 

The mortgage is the original one, dates from October 2006 in the amount of $480,000. Yes, they have tried to renegotiate with the lender.

Are the clients aware that since it is the original mortgage the are protected by California's anti-deficiency statute? They already have no personal liability.

 

 

Would it help you to see any more of the schedules or statements in the petition package?

I do not think that additional schedules will help.


I have concerns that they will not be able to successfully complete the Chapter 13 and they will have wasted their money on the plan payments. They could not convert to a Chapter 7 as they would likely lose their business contracts and the Chapter 7 would not provide much of a benefit (just the car deficiency).


I think that these people may be better served by not filing bankruptcy. They could stop making payments on the mortgage and pay the IRS outside of bankruptcy with their disposible income. This could achieve a fresh financial start.


Thank you,

FLandNYLawyer





THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE


Customer: replied 6 years ago.

Can you tell me more about the California's anti-deficiency statute?

 

Are you saying it may be possible for them to keep their house under this statute and not have to file bankruptcy?

 

That is their main mission - to keep their house. If that is possible.

 

Thank you.

Expert:  FiveStarLaw replied 6 years ago.

Hello,


They would not be able to keep the house but they may have no deficiency for a foreclsoure either.


Deficiency judgments in CA can be summarized as follows.


Deficiency judgments can not be entered for foreclosures by private sale or on purchase money mortgages. A lender cannot get a deficiency judgment if it forecloses by private sale, nor can it do so if the underlying loan was a purchase-money loan.


Deficiency judgments can be entered on judicial sales of non-purchase money mortgages. A judicial sale entitles the lender to a deficiency judgment, unless the loan was a purchase-money transaction. At the same time, it entitles the defaulting borrower to redeem his property if he can pay the necessary charges and cure his arrears.


This basically means that if they incurred the mortgage on the California home to purchase the home, they may not be responsible for any amount remaining unpaid after a foreclosure sale.



Thank you,

FLandNYLawyer


Please hit ACCEPT so that I can get credit for my work

Bonuses and Positive Feedback gratefully accepted!


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE

FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you
Expert:  FiveStarLaw replied 6 years ago.
Did you receive my post re deficiency judgments?
Customer: replied 6 years ago.

Yes I did. Thank you for all your assistance.

 

It sounds like there is no way for them to keep their house, which is disappointing.

Expert:  FiveStarLaw replied 6 years ago.
Yes it is disappointing. However, it is better to face that fact now rather than after the expense of a failed Chapter 13.
Customer: replied 6 years ago.
You are right. Thank you so much for all your assistance. I truly appreciate it.
Expert:  FiveStarLaw replied 6 years ago.
Good luck to you and them.
Customer: replied 6 years ago.

Can I ask one final question please?

 

How do I finish with the court? They filed the petition and are supposed to file the plan in a few days. If they decide not to go through with it, how does it end exactly?

 

And concerning the deficiency judgement, how is that handled if they do not file bankruptcy? I'm confused on that one. I just want to make it as easy as possible for my friends to get on with things.

 

Thanks very much,

 

CJ

Expert:  FiveStarLaw replied 6 years ago.
Hello CJ,

You can ask as many questions as you think that I can assist you with. No problems.

If your friends decide not to proceed with the Chapter 13, they can simply not file the plan nor attend the 341 hearing. The case will be automatically dismissed.

You had previously stated "The mortgage is the original one, dates from October 2006 in the amount of $480,000.". If this is true, they will not be personally liable on the mortgage and note.

Thank you,

FLandNYLawyer

THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE


Customer: replied 6 years ago.

They will not be personally liable on the mortgage and note - does that mean the lender won't come after them on the deficiency judgment? Or just what exactly?

 

Also, how soon do you think the foreclose will start up again when the lender learns of the bankruptcy not being completed?

Expert:  FiveStarLaw replied 6 years ago.
Hello CJ,

"They will not be personally liable on the mortgage and note" means that a deficiency judgment cannot be entered against them. There will be no monies owed to the lender if the house sells in a foreclosure sale for less that the monies owed.

Most lenders are overwhelmed with the amount of foreclosures. Many people are able to remain in their homes for many months and some a year or more.

I can assist you if you have questions going through this process.

Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
Expert:  FiveStarLaw replied 6 years ago.
CJ -

There may be a way to challenge the foreclosure. Are you still interested?

Bonus and Positive Feedback = job well done.


THIS IS FOR INFORMATION ONLY. NO ATTORNEY-CLIENT RELATIONSHIP EXISTS. PLEASE CONSULT A LAWYER IN YOUR STATE FOR LEGAL ADVICE
Customer: replied 6 years ago.
Yes, sure. Please tell me more.
Expert:  FiveStarLaw replied 6 years ago.
Hello CJ,

A collegue suggested that you might also advise your friends to meet with a foreclosure defense attorney who may be able to challenge any foreclosure on the basis of TILA, RESPA, lack of right on part of foreclosing entity to foreclose as not being the true holder in due course (if the "lender" can't come up with the mortgage, note or the proper assignments, and having been recorded).

It may be worth a try.

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FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36554
Experience: Bankruptcy Lawyer. Experienced.
FiveStarLaw and 2 other Bankruptcy Law Specialists are ready to help you

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