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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 12073
Experience:  JD, MBA
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I am two-and-a-half years into chapter 13 I have some issues

Customer Question

I am two-and-a-half years into chapter 13 I have some issues coming up and I'm not happy with the response from my current life are you able to help
Submitted: 9 months ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 9 months ago.

Hello and thank you for the opportunity to assist you. My name is ***** ***** I'll be glad to help if I can. Do you have any specific questions about your bankruptcy? I just want to make sure that I understand what legal information you are seeking. Thank you.

Customer: replied 9 months ago.
I have a couple of issues on the table I have a windfall inheritance of $50,000 coming up and I want to know if I'm able to keep it my bankruptcy is filed in Santa Rosa California 95407 I also need some major repairs done to my home and I want to know how to proceed with that being that I'm in bankruptcy
Expert:  TJ, Esq. replied 9 months ago.

Hi again.

I am researching the inheritance issue.

In the meantime, can you be more specific about your question regarding major home repairs? For example, are you considering taking out loans for these repairs?

Thanks.

Customer: replied 9 months ago.
I have about $80,000 of equity in my home and and my granddaughter has come to live with me and I want to add a room plus the house is not safe it has some shorts in the wiring sparking Outlets not working ceiling lights not working I have serious rot in the kitchen under the sink the floors like falling in a family member fell through my backyard deck the other day my house is just kind of falling apart and need some major stuff done to it I cannot wait another two and a half years for these repairs
Expert:  TJ, Esq. replied 9 months ago.

Hello again.

Inheritance Issue: Unfortunately, the inheritance will be considered part of your bankruptcy estate. This means that you will need to inform your Chapter 13 Trustee, and your Plan will likely be recalculated with higher payments. This is based upon a fairly recent 9th Circuit opinion:

"[W]e conclude that the bankruptcy court did not err in determining that an inheritance received by chapter 13 debtors more than 180 days following the petition date [...] and before the case is closed, dismissed or converted is property of the debtors' bankruptcy estate."

In re Dale, 505 B.R. 8, 13 (B.A.P. 9th Cir. 2014).

Home Repair Issue: Before you may take out any loans or obtain any credit, you must get permission from your Chapter 13 Trustee. If you do not get permission, then he could file a motion to dismiss your case or convert it to a Chapter 7 and liquidate your assets. The Trustee will undoubtedly analyze your financial circumstances and wonder how you will make loan payments, and if you do have enough money to do so, then he may want you to put more money into your Plan to pay unsecured creditors.

I am truly sorry that my answer may be bad news for you, but please understand that it would be unfair to you (and unprofessional of me) to provide you with anything less than an honest response. However, if your concerns were not satisfactorily addressed, then please let me know, and I will be happy to clarify my answer.

Customer: replied 9 months ago.
my inheritance won't be seized I will be able to keep the 50,000 and it will just be a bigger payment that I pay? Is there an option to change my chapter 13 to chapter 7 and if you can do that what would be the benefits of doing that
Customer: replied 9 months ago.
far you've only told me the exact thing I've read from the law books I need a personal answers like I was hoping that you would elaborate on some emergency type of situations where you don't have to contact your trustee as far as repairs to your home I mean my home is what is securing the debt so you think that they want me to take good care of it if it goes up and smokes doesn't do anybody any good if I can do the repairs and only adds to the value of their asset
Expert:  TJ, Esq. replied 9 months ago.

Hi again.

Q: So my inheritance won't be seized I will be able to keep the 50,000 and it will just be a bigger payment that I pay?

A: It could be either, but it would be up to you. If you want to keep the cash and make bigger payments, which is what most people would do, then you may do so. But if you prefer to just hand over the money, then that is an option as well.

Q: Is there an option to change my chapter 13 to chapter 7 and if you can do that what would be the benefits of doing that

A: Yes, you can convert your Chapter 13 into a Chapter 7, but there isn't usually a benefit in doing so unless you have given up on the notion of keeping your assets.

Q: So far you've only told me the exact thing I've read from the law books I need a personal answers like I was hoping that you would elaborate on some emergency type of situations where you don't have to contact your trustee as far as repairs to your home I mean my home is what is securing the debt so you think that they want me to take good care of it if it goes up and smokes doesn't do anybody any good if I can do the repairs and only adds to the value of their asset

A: There are no emergency situations where you can take out loans to repair your home and not inform the Trustee. It doesn't exist. The mortgage company may want you to take good care of your house, but that doesn't benefit the Trustee or your other creditors. Accordingly, making new loan payments will not help them, and may put a strain on you financially, which hurts your other creditors. Again, what you describe only helps the mortgage company, and no other creditors. Therefore, taking on new debt may not be allowed.

I'm sorry for this bad news, but I can only relate the law back to you. The reason you may have read this information in law books is precisely because it is correct, and it is the law. I truly wish that I had better news.

Customer: replied 9 months ago.
Would the shape of my home be just case for a hardship dismissal me and my husband are both seniors on a fixed income we need our house to be safe as it stands right now electrical problem is a pretty big problem
Customer: replied 9 months ago.
How about taking in my granddaughter does that have any effect on my chapter 13 also can you tell me how an early payoff would work out do I have to pay 100% or just all of what is in the chapter 13
Expert:  TJ, Esq. replied 9 months ago.

Hi again.

Q: Would the shape of my home be just case for a hardship dismissal me and my husband are both seniors on a fixed income we need our house to be safe as it stands right now electrical problem is a pretty big problem

A: That depends on the details of your situation. If you live in a million dollar home and have huge mortgage payments, then the answer is likely no. A court would tell you to give up the house, move into an affordable apartment, and continue making Plan payments. On the other hand, if your house isn't worth much, and your mortgage payments are no larger than what you'd expect to pay in a reasonable apartment, and you don't have other assets, then it's possible that you could get a hardship discharge. One key element is whether your unsecured creditors would get no less than if you had filed a Chapter 7 (i.e., if your non-exempt assets are liquidate and paid to your creditors).

Q: How about taking in my granddaughter does that have any effect on my chapter 13

A: Taking in your granddaughter wouldn't ordinarily affect your Plan, unless you are taking her on as a legal dependent. If that is the case, then you can increase your expenses in Schedule J, which should decrease your available funds for creditors. Thus, your Plan payments could be lower. But even that depends on what is driving your Plan payments: Your secured debt and assets, or your income. Based on what you wrote here today (i.e., fixed income), it sounds like your secured debt and assets drives the Plan payments. If that is the case, then even a new dependent wouldn't likely change your Plan.

Q: also can you tell me how an early payoff would work out do I have to pay 100% or just all of what is in the chapter 13

A: You'd have to pay the remainder of the Plan up front. For example, if you have 30 months of payments to go, at $1000 per month, then you can pay it off early if you pay $30,000 up front. Of course, the key here is that the $30,000 in this example can't come from property owned by the estate (such as your $50,000 inheritance). But if you have a rich relative who wants to pay your Plan off immediately, then it can happen.

I hope that helps. Please remember to provide positive feedback. Thank you!

Customer: replied 9 months ago.
I have 30 payments of 150$ I can pay that off and be done ? Are you sure?
Customer: replied 9 months ago.
What are my first steps in using my house and it's repairs as a case for hardship dismissal.. what do I need to do? My house is worth 380,000 I owe 312,000 my payments are 1600$ and the average rent here is starting at about 1800-2000$ for a one bedroom
Customer: replied 9 months ago.
Are you still with me
Expert:  TJ, Esq. replied 9 months ago.

Hello again. Thanks for your patience, as I logged off for the afternoon shortly before your latest responses.

Q: I have 30 payments of 150$ I can pay that off and be done ? Are you sure?

A: It's not quite as simple as that. As I mentioned in my example, if a rich relative wants to pay it off, then you may be able to do so. But if the money comes from your own income, then there is a problem. The problem is that your Plan was set up such that you pay all of your disposable income to the Trustee each month. If you can afford to pay the entire Plan upfront, then that means you weren't paying all of your disposable income to the Trustee each month. Accordingly, the Trustee and your creditors will likely object to an early payoff, and instead seek to have your Plan changed so that the monthly payments are higher. So, whether you can pay it off early depends on the circumstances. But you must get Court approval, and the Trustee and creditors have the right to object if they wish.

Q: What are my first steps in using my house and it's repairs as a case for hardship dismissal.. what do I need to do? My house is worth 380,000 I owe 312,000

A: Unfortunately, that alone is likely a reason not to allow a hardship discharge. You have almost $70,000 in home equity. That hardly sounds like a hardship considering you can sell the house, and then use the equity to pay debts. That's how a court would view the situation. So, I'm sorry to say that the facts in your case probably disqualify you from a hardship discharge.

Expert:  TJ, Esq. replied 9 months ago.

Hello again. I didn't hear back from you, so I'm just checking in to make sure that you don't need more help on this issue. If not, then please remember to provide a positive rating via the stars (and note that your positive rating is the only way that I'll get credit for helping you, so I greatly appreciate it). Thank you!

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