My wife and I had a joint chapter 7 discharged in July 2010, in Orlando FL. We need to file a chapter 13. We are 4 months behind on our mortgage and 24 months behind on our home owner association. Our mortgage was recently sold to another lender and the loan that transferred was modified about 2 years ago into a 2% fixed for about 5 years with slight adjustments. The balance is about 220,000 and then another 125,000 balloon in 25-30 years. I am 59 and she is 45 with three children. My wife is a teacher and earns about 38,000 a year. I am self-employed and my earnings vary based on straight commission. I am paid on a 1099, with gross commission earnings distributed once or twice a month if earned. Good months, bad months. I am able to deduct a large percentage of my income at tax time. I don't know how they will determine what my trustee payment will be.
A: Your plan must devote all of your disposable income to paying unsecured creditors. You must pay your unsecured creditors at least as much as they would receive in a Chapter 7. Based upon your description of your finances, you may be able to propose a 0% plan, and only pay your secured creditors, because you don't appear to have any assets to distribute.Since I am more than 3 years out of Chapter 7 discharge does that mean I will have to take all my unsecured debt and divide it by 60 (months) and pay it off entirely?
A: No. A Chapter 13 filed after a Chapter 7 discharge does not create any automatic liability for the debtor. The only requirement is that the Chapter 13 discharge cannot occur within four years of the date that the Chapter 7 was filed. That won't be a problem, because the shortest Chapter 13 plan is three years, and it's already been three years since July 2010. So, your Chapter 13 plan can be entirely ordinary in its terms and conditions. The only secured debt we have is the house. I have not been served any papers yet for foreclosure and don't know how long I have to file a Chapter 13 to protect ourselves from the HO association foreclosing or the 1st mortgage.
A: Whenever you file, all collection efforts must stop. The HOA or lender can request relief from the automatic stay and then foreclose. But, if your plan proposes to catch up on your payments, the court won't lift the stay. If you cannot make the necessary payments, then the court will lift the stay, and you will lose your home -- making the bankruptcy a waste of time, if that's your principal goal. We have a 2nd mortgage that has been inactive for many years and never tried to collect. It's about another 150,000 or so. It was not stripped out in the Chapter 7 for some reason.
A: There are numerous problems in Florida concerning both lienstripping of a second lien in Chapter 13 after filing Chapter 7, as well as in lienstripping HOA assessments. The law is different in the three different Florida bankruptcy courts
, and the 11th Circuit Court of Appeals, that controls all Florida bankruptcy law is getting ready to make an important ruling on the issue. Consequently, I cannot possibly answer this question, ,and you will need to discuss it with local counsel. The house value was as high as 440,000 and now about 225,000. Our unsecured debt is about evenly divided between consumer credit and medical. About 5,000 each for a total of about 10,000. My gross earnings are about 45,000 a year. What are my options?
A: Explained above.
What kind of trustee payment am I looking at?
A: ≈$200 per month, not including maintaining your current mortgage and HOA payments.
Will I have to pay the entire amount divided over 60 months?
A: No. Explained above.
How will the mortgage and HOA arrears be divided over the chapter 13?
A: You must catch up over the course of the plan, or be able to pay a balloon at the end. Some debtors create a plan with a balloon and hope that the real estate market will recover, or their income will increase to make it possible to satisfy the balloon. In my experience, this almost always fails and the Chapter 13 is dismissed. Sometimes this is okay, because the debtor has finally decided to let their home go. Debtors who are severely underwater in their home are generally better off letting the home go -- but, they can rarely be convinced of this, so they create a bankruptcy plan that will ultimately fail, leaving them in the same boat as they started, five years after they file bankruptcy.
Something to think about. My wife was laid off during the summer and I earned nothing from June 1st through September 15th so that's how we got behind. How long do I have before the foreclosure proceedings begin?
A: A lender can commence a foreclosure action whenever it finds the borrower in default. There is no "up front" time before the lender can commence the action. The process generally requires 135 days.
I'd like to be able to put off filing to save some money. Otherwise I will have to make trustee payments almost immediately. On the other hand how can I find out what the banks plan is for foreclosing and their schedule? What if they send me a certified letter and I miss the notice somehow?
A: There's no way to predict what the bank will do. If you miss the notice, you may be defaulted. However, practically no one misses the notice, because it is usually served on you by the sheriff personally, or notice is posted on your front door.
Please let me know if I can be of further assistance. And, thank you for using justanswer.com.