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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
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Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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This is a chapter 13 question. The plan has already been confirmed

Resolved Question:

This is a chapter 13 question. The plan has already been confirmed and it is a 100% plan. The bar date has not yet passed. The debtor surrendered some real estate where his business used to be and the subject creditor just filed a deficiency claim for an estimated 450K. This debt was originally listed on his secured property schedule, not his unsecured property schedule. Anyway, this makes the debtors plan payments go from about $650 per month to about $9K per month, which the debtor obviously cant pay. 2 related questions:
(a) Does the debtor need to amend his unsecured debt schedule, then amend his plan to reflect a pot that mathematically works with his current plan payments (which are all the debtor can afford).
(b) The debtor has reason to believe that the property was sold. He only owed about 460K on it so obviously the sale would bring that down. Does the debtor need to object to the amount of the claim?
Thank you in advance for your assistance.
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 2 years ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

The issue here is if the debtor is eligible for a ch13, as he would be well above the debt ceiling. I would say the effective date is the date of filing if the debt is secured or unsecured. Had the property been foreclosed at the time of the filing?

Terry L. :

Yes, the true balance would be unsecured if the property had been sold.

Terry L. :

The creditor would only be able to get a deficiency balance claim.

Terry L. :

i've seen cases where the plan controls, so as long as the creditor is listed on the petition, and the plan sets out treatment, it should be fine.

Terry L. :

So, you may need to file an amended plan, indicating that the debtor will surrender the property, and the creditor will be allowed an unsecured claim for any deficiency balance remaining after sale of the asset.

Terry L. :

I would also file an objection to the claim, yes, if the debtor knows that the property is sold. The lender will then likely file an amended claim.

Terry L. :

Let me know if you have any questions. thanks

Terry L. :

Terry

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2539
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and 4 other Bankruptcy Law Specialists are ready to help you
Customer: replied 2 years ago.
The property had not yet been foreclosed on, but was "in the process" in other words this specific debt did not exist at the time of filing. Regardless, I dont think he is above the debt ceiling. Does the debtor need to amend his unsecured schedule and then move to amend the plan to have a pot that works mathematically with his current payments?
Expert:  Terry L. replied 2 years ago.
I concur, it would be a secured debt then, which keeps him under. no, he shouldn't need to move the debt as long as the plan addresses them being permitted a claim on the deficiency only. Your jurisdiction may need it, so check with the trustee, but they don't in Chicago anyways.
Thanks
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2539
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and 4 other Bankruptcy Law Specialists are ready to help you

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