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socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 38567
Experience:  Retired (mostly)
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Iam in a chap 13 bankruptcy now. The judge kept turning down

Customer Question

Iam in a chap 13 bankruptcy now. The judge kept turning down my loan modification due to my budget not reported correctly and lawyer wanted to put me on the stand. Now I asked her that I want to surrender my house and let it go into foreclosuee. She said I could do that but I still owe credit card debt. Could I just file a chapter 7 and do a.loan modification through my mortgage company. Also she counted my veterans disability as income on my budget sheet. This is non taxable incom.
Submitted: 1 year ago.
Category: Legal
Expert:  socrateaser replied 1 year ago.

Hello,

Concerning your question about converting your Chapter 13 into a Chapter 7, and then negotiating with your lender, the answer is, "yes," you can do this, provided that your income meets the requirements of the "means test."

Concerning the veteran's disability being nontaxable income, the U.S. Bankruptcy Code considers all income, except Social Security, in the means test calculation. The fact that your veterans disability is not taxable does not matter in bankruptcy court. However, the means test does not apply to a veteran if his or her indebtedness occurred while on active duty, or during a homeland defense activity.

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