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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9697
Experience:  Licensed to Practice Law
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Received a letter from Chapt 13 Trustee of default on monthly

Customer Question

Received a letter from Chapt 13 Trustee of default on monthly pay plan. Reason is lack of income and unemployment. What is the worst that can happen? Is it another option? I'm in Illinois.
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 3 years ago.

Hello and thank you for allowing me the opportunity to assist you.

You can try to work it out with the trustee, but more than likely he’ll want your Chapter 13 dismissed since you’re unemployed and can’t pay the planned payments. That would mean that you won’t get a discharge. The more practical option is to convert your Chapter 13 to a Chapter 7. Of course, one of the problems with that option is that if you were attempting to protect certain assets by paying into the plan, then they may be seized.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

If the information that I provided is helpful, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

Customer: replied 3 years ago.
Cannot file a 7 because of trying to keep house, if case is discharged what happens then? what will the trustees do if they cannot get paid ?
Expert:  TJ, Esq. replied 3 years ago.
Hi again. When you ask what happens if your case is "discharged," do you mean "dismissed"? If so, then you'll still owe your debts just as you did prior to your bankruptcy, and your creditors can go after you just as they could have before the bankruptcy. If the trustee doesn't get paid, then he'll file a motion to have your bankruptcy dismissed.

Perhaps you can keep your house if you convert to Chapter 7 and reaffirm the debt. You may want to talk to the lender about that possibility to keep your home.

If the information that I provided is helpful, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

Customer: replied 3 years ago.

Yes I did mean dismissed. Can you negotiate with creditors when a case is dismissed and you find a Job?

 

Also there were 2 trustees, one at the 341 meeting and the chap 13 trustee, both charged a fee. So Will both dismiss the plan?

 

 

Expert:  TJ, Esq. replied 3 years ago.
Hi again.

You can always negotiate with creditors. There is no law limiting it (even during a bankruptcy you can negotiate if the creditors wants to). That doesn't mean, however, that the creditors must negotiate. It is strictly voluntary.

Only the court can dismiss the bankruptcy. The trustee in charge of the plan will file a motion asking the court to dismiss it.

If the information that I provided is helpful, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9697
Experience: Licensed to Practice Law
TJ, Esq. and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.
Because of unemployment I cannot afford to pay the entire amount of the Chap 13 payments. I received a letter from 13 trustee stating a motion to dismiss has been filed Is there any way the payment can be reduced? payment is $960 a month.
Since I have some equity in my house my counsel said the chap 7 trustee can file a motion to convert back to a Chap 7 and force the sell of my house... are there any options?
Expert:  TJ, Esq. replied 3 years ago.
Hi again.

Unfortunately, the amount that you pay into the plan is tied to the value of the assets that you want to protect. If your plan does not offer your creditors at least as much as they would get by selling the assets, then the assets cannot be protected. For example, let's say that your house has $50,000 of equity that could ordinarily be reached by your creditors. In order to protect your house, your plan must pay at least $50,000 total to your creditors over the course of your plan. Your plan cannot be reduced so that you pay your creditors less or they could demand that your house should be sold immediately. Does that make sense?

So at this point I'm afraid that you may not have many options to save your house if you cannot pay your plan payments. All I can do is suggest that you follow the advice of your counsel. I wish I had better news.

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