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FiveStarLaw
FiveStarLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36491
Experience:  Bankruptcy Lawyer. Experienced.
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After paying into a Chapter 13 Bankruptcy for three years of a five-year bankruptcy, I am

Customer Question

After paying into a Chapter 13 Bankruptcy for three years of a five-year bankruptcy, I am going to get a settlement which I initiated well after my bankruptcy began. Can I put the money in escrow for the remaining 2 years of the bankruptcy to avoid paying it to the bankruptcy court?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  FiveStarLaw replied 2 years ago.

WebLaw :

*This chat is not intended as legal advice. It is general information that may or may not apply to your situation and should not be relied upon.*

WebLaw :

Welcome to JustAnswer,

I shall be providing you with information in response to your question.

If the information is not clear to you or does not fully answer your question, please ask me for clarification by using the reply button.

WebLaw :

Did the cause of action that you settled occur before you filed the bankruptcy petition or after you filed the bankruptcy petition

Customer:

after

WebLaw :


I am working on your answer. One moment please.

Customer:

I got cancer a year after filing bankruptcy

Customer:

Lung cancer (asbestos)

WebLaw :

Sorry to hear that


You will need to determine whether your plan is at 100%. Chapter 13 plans must pay 100% or pay all disposable income for at least three years after the date of the first payment under the plan. If your plan is at 100% or 3 years has elapsed, you can use the funds as a plan prepayment. If not, your settlement will need to be paid into the plan in addition to the amount stated in the plan.


Customer:

Will putting the funds in escrow save me from getting the money in my hands and reporting it? I have been paying the bankruptcy on time for over three years and just have two years left. I am paying a partial payment of everything owed, but it will go back to 100% if I report the windfall.

Customer:

If I received the windfall after the bankruptcy ended, I would be able to keep all of it, which is not going to be much when they take out for the lawyers and medicare.

WebLaw :

If you now have the right to receive the funds, regardless of whether it is an escrow, if less than 3 years has elapsed on your bankruptcy plan, you are required to paid into the court

WebLaw :

It is the right to receive the funds that the court is concerned with – not necessarily the actual receipt of the funds

WebLaw :

It has been my pleasure to assist you.


Your satisfaction is very important to me.
If I have not answered your question completely, please let me know by clicking reply.
If you are satisfied with my service, please leave positive feedback even if the law is not in your favor.


Please let me know if I can assist you in the future by starting your new question with "For WebLaw"

Expert:  FiveStarLaw replied 2 years ago.
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Customer: replied 2 years ago.
I don't understand what you said by saying: "It is the right to receive the funds that the court is concerned with – not necessarily the actual receipt of the funds." I did say that I have already paid into the bankruptcy for three years. Does this free me from any type of obligation to report a windfall or make it easier on me in any other way than if I had not finished three years into the bankruptcy?
Customer: replied 2 years ago.
I do not want to open the question to all bankruptcy lawyers online. I will wait for an answer to the above from you, my expert. I don't think it came through clearly to you that I have passed the three-year mark of paying into the Chapter 13 bankruptcy. I did not know I was getting a windfall (settlement on an asbestos cancer case) until after the three years of paying into my bankruptcy. This windfall is still pending. What happens if I receive a portion of the windfall while in the final two years of paying the bankruptcy? Will the bankruptcy go back to my having to pay 100% and wipe out all of the three prior years of paying? I don't understand your previous replies. Can I avoid all of this by asking the lawyer for the asbestos settlement to place the money in escrow for me, and is this possible? I would certainly like to avoid paying anymore money than is necessary into the bankruptcy, as I am struggling with this Chapter 13 bankruptcy and barely can put food on my table. This past year I have incurred some unexpected bills that I did not expect. My air conditioning on my house went, and the motor on my older car blew. I got a second-hand motor on my car and a used air conditioner for my house. I am not young and would love to enjoy being debt free at sooner than later. Thanks.
Customer: replied 2 years ago.
I continued with the question and would like a clearer answer. See above (my question). Please respond, and I will respond to your asking if I am satisfied. Thanks. I would appreciate a clearer answer. Thanks again.
Customer: replied 2 years ago.
For Weblaw: Please answer my initial question. I don't feel I was given the correct answer.
Expert:  FiveStarLaw replied 2 years ago.
I apologize for the delay. I was not on line when you responded.

I am happy to clarify.

If 3 years have elapsed under the chapter 13 plan, you can use the funds as a plan prepayment.

Once a debtor passes the three-year mark on the 5 year payment plan, a plan would not go to 100%. Instead the windfall would reduce the amount of the plan.
Customer: replied 2 years ago.
I understand that the windfall can go to prepaying the bankfuptcy, however, can we pay it all up before the last two years of the five-year payment plan is reached. Can we pay a lump sum payment to satisfy the complete amount of the bankfuptcy and end it? Also, you didn't answer me about keeping the funds in escrow. Is that an option to avoid paying the funds to the bankruptcy court? We would still continue to pay the same amount every month to satisfy the bankfuptcy court.
Expert:  FiveStarLaw replied 2 years ago.
I understand that the windfall can go to prepaying the bankfuptcy, however, can we pay it all up before the last two years of the five-year payment plan is reached.
typically yes

Can we pay a lump sum payment to satisfy the complete amount of the bankfuptcy and end it?
typically yes

Also, you didn't answer me about keeping the funds in escrow. Is that an option to avoid paying the funds to the bankruptcy court? We would still continue to pay the same amount every month to satisfy the bankfuptcy court.
It is not an option because you would have the right to receive the funds

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