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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34665
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I have inherited and have two years left on ch. 13. I will

Customer Question

I have inherited and have two years left on ch. 13. I will receive about $50,000. Am only paying 5 % to creditors, but $524.00 a month. Desperately need new car. Car is part of secured debt. What will it cost to dismiss? What happens to all of the $8000 I have already paid? Can I just go write a check for the car? Should I dismiss at all? Total left for two years is$11000.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 1 year ago.
Hello -- you asked:

What will it cost to dismiss?

A: Dismissal will require a noticed motion, and probably a hearing. I'd probably charge you an additional $1,000 for the work.

What happens to all of the $8000 I have already paid?

A: If you mean, "paid" to the creditors, the money reduces your debts to the extent that the creditors have received payment.

Can I just go write a check for the car?

A: This is a very difficult issue. There are actually four different opinions by different bankruptcy courts, consequently, you will have to ask your attorneys which opinion is likely to prevail in your case. It's simply impossible for me to answer this question, given the current split of authority among the courts. Ask your attorney to research the "tension" between Bankr. Code Sections 1327 and 1306."

Should I dismiss at all?


A: Based on the limited info you've provided -- probably not, because, I have a feeling your inheritance will be used to pay creditors, whether or not you dismiss. A 5% plan where you have already paid $8,000 over two years, suggests your total plan covers debt of about $400,000. Consequently, you will still need your bankruptcy plan, even with the inheritance.

The main question concerns an immediate purchase of the vehicle. I believe you can get consent from the bankruptcy trustee to do this, even if the case law is against you. But, your plan will probably have to be modified to make equivalent payments to your creditors so as to cover the cost of the vehicle over the three-year remainder of the plan.

Hope this helps.
Customer: replied 1 year ago.
There appear to be more confusion. I do not have $400,000 in debt. I've never seen that kind of money. My total debt was $26,000 and change. If I am required to modify a payment plan at $524/mo. For the next two years, what would I be looking at per month in modified payments at100%? The largest amount was my trays car and that was secured debt at $11,000. The next highest unsecured debt was $5000. Downhill from there.
Expert:  socrateaser replied 1 year ago.

My apologies. I thought you said a 5% plan and that you had paid $8,000 over two years. That would result from a $400,000 debt over 5 years. No matter, I'll work with your clarified numbers.

At 100%, you would be looking at ≈$750 per month for two years.

But, since your inheritance is nearly twice that of the total debt, you may actually be better dismissing the case, and just paying off your creditors with a lump sum. You would still have half of the inheritance to purchase a car.

Hope this helps.

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34665
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you
Customer: replied 1 year ago.
Getting better. Another question. I have been reading that they may not allow a dismissal short of 36 months of planned payments? Any truth? I also read - who hates armature lawyers more? That I can dismiss whenever I choose. Hat do you think?
Expert:  socrateaser replied 1 year ago.
The most recent case law in NY bankruptcy courts holds that the debtor's right to dismiss a bankruptcy is absolute. Bankr. Code 1307(b); In re Procel, 467 BR 297 (USDC SD NY 3/15/2012).

In other words, if you move for dismissal, the court must grant the request. Period.

Hope this helps.

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socrateaser
socrateaser
Bankruptcy Lawyer
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Attorney and Real Estate Broker -- Retired (mostly)