So, I got my Chapter 13 plan confirmed, but now the trustee wants to see my tax returns every year. Why?

The reason for that, is that during the term of you Chapter 13 case, 36 to 60 months, your income might fluctuate significantly, and you’re supposed to pay over all of your net disposable income in order to qualify for a Chapter 13 discharge.

So, if your income spikes all the way up one year and that is revealed in your tax returns, the trustee needs to know it so that the trustee can go back into court and ask the judge to modify your Chapter 13 plan. Now that’s not a good outcome, but it doesn’t happen that often.

On the other hand, in some Chapter 13 cases you need to turn over your tax refunds every year because that’s also part of your net disposable income, and the trustee needs to monitor your tax returns in order to see if you’re getting refunds. So, there are reasons why the Chapter 13 trustee does need to take a look at your tax returns every year.

Thoughts from a Maryland Bankruptcy Lawyer

The post Why Does The Chapter 13 Trustee Want To See My Tax Returns Every Year? appeared first on Baltimore Bankruptcy Lawyer.

So I’m going to file a Chapter 13 and I know I need to meet with the trustee at least once during my case. Do I have to go to my confirmation hearings also?

The good news at least in Maryland is that the trustees like to move their dockets through as efficiently as possible so if you’re current on your plan payments and you’re getting in documents and you’re making a good-faith effort to meet the requirements of Chapter 13, then most of the time you won’t have to go to a confirmation hearing so you won’t have to take off time from work and make arrangements to get to the federal courthouse to do that.

But if you’ve missed a bunch of payments and there’s a problem because they just think that the amount that you’re going to pay is too low and you can’t meet in the middle and you got to go to the judge and get the judge’s permission to approve your plan, then yes you’re going to have to go to that confirmation hearing.

Now, besides everything I’ve said, when your lawyer tells you about a confirmation hearing you really need to put that on your calendar and reserve the day until the lawyer tells you that you don’t have to go.

Thoughts from a Maryland Bankruptcy Lawyer

The post Do I Have To Go To Confirmation Hearings In My Chapter 13 Bankruptcy? appeared first on Baltimore Bankruptcy Lawyer.

Today I want to answer the question, what is a zero distribution plan in Chapter 13. The answer to that question is that Chapter 13 offers you opportunities to do certain, very specific things. For example, you can discharge parking violations or other toll violations or speeding tickets in Chapter 13 where you can’t do that in Chapter 7.

Sometimes you can restructure an automobile loan if you’ve had the car for more than 910 days and the car is worth much less than what you owe. Sometimes you can cure arrears on a home mortgage so that you can catch up those arrears over 60 months and keep your home; and other types of things that are only available in Chapter 13.

When that happens, you can file a plan that will payout your net disposable income over 5 years or 3 years, as the case may be, and it’s possible that your net disposable income is really zero dollars or close to zero dollars. And then your payment will only be for fees of the trustee and probably fees for your bankruptcy lawyer as well. If what you’re trying to do is cure the arrears on a home mortgage, then your Chapter 13 payment may only be the amount required to cure the arrears on that home mortgage. And then there won’t be anything extra that other general unsecured creditors will receive in the bankruptcy.

When unsecured creditors aren’t going to receive anything in a bankruptcy under Chapter 13 that’s called a zero distribution plan. Now, some states and some districts and some jurisdictions they strongly disfavor those and may require you to make a payment to general unsecured creditors in Chapter 13. So you are in most states and jurisdictions authorized to have a zero distribution plan in Chapter 13.

The post What Is A Zero Distribution Plan In Chapter 13? appeared first on Baltimore Bankruptcy Lawyer.

How much is my Chapter 13 payment going to be? I’ve answered that question in a couple of different ways, in a couple of different videos, but there’s a third consideration that we have to address and that is, do you have priority claims against you?

Priority claims are going to need to be paid in full over the life of your Chapter 13 plan. The most common priority claim that you’re going to see in your Chapter 13 case will be taxes that you haven’t paid that are due for the last, usually 3 years before you filed your case. Those have to be paid in full at the statutory interest rate, right now that’s about 6 percent, although that could change over the life of your plan.

So, that means if you don’t have to pay anything else, if your net disposal income is zero based upon the different formula that I’ve discussed in other videos, and if you have no equity in your property, if you want to pay these taxes off because the IRS isn’t playing ball with you, then you’re going to have to able to do that over 36 to 60 months depending upon your income.

Another priority debt is frequently if you have an unpaid domestic support obligation. That is also entitled to priority status. That’s also going to need to be paid in full in your Chapter 13 case.

The post How Much Is My Chapter 13 Payment Going To Be? Part 3: Priority Claims appeared first on Baltimore Bankruptcy Lawyer.

Today I want to answer the question how much is my Chapter 13 payment going to be, and there’s another factor which is what’s your net disposable income. This is a tricky question to answer because your net disposable income is going to depend upon a lot of factors, the first of which is: Is your income above or below the median income for families of your size in your state? If the answer is “it’s below”, then it’s pretty simple. We take your income, we compare it to the expenses you are allowed to pay, and whatever that difference amount is, that’s your net disposable income. And we’re going to multiply that by 36 to 40 months, depending upon how long your case is going to be. At the end of that period, you’re going to get a discharge.
Now, if your income is above the median income for your state, it’s a different analysis. We’re going to use a hodgepodge of different standards: Your IRS local standards, there’s IRS national standards. If you have secured debt for your car, that’s going to get paid for dollar for dollar. We have secured debt for your house. That’s going to get paid dollar for dollar. And we’re going to consider all of these as part of what I call the “long form” to determine what your net disposable income is going to be if you are an above median debtor in your jurisdiction.
So, it’s a complicated answer, but basically, you’re going to have to pay at least your net disposable income for 60 months if you’re an above median debtor and your net disposable income based upon your actual income and expenses for 36 to 60 months. It’s your choice, depending upon if you’re a below median income debtor.

The post How Much Is My Chapter 13 Payment Going To Be? Part 2: Median Income appeared first on Baltimore Bankruptcy Lawyer.

Today I want to answer the question, how much is my Chapter 13 payment going to be? The answer to this question is going to depend upon a number of factors.

One factor is, do you have surplus equity in your property? If your property has equity or value above the amount of secured debt and above the amount of exemptions you’re allowed to keep, you’re going to have buy that equity back from creditors in Chapter 13 over 36 to 60 months.

We’re going to divide that equity by the number of months in your plan and that’s going to be amount that your Chapter 13 payment is going to be. So many times there is no equity in your assets and if that’s the case, you may not even want to consider Chapter 13, but if you do have equity, you are going to have buy that equity back from your creditors in the Chapter 13

The post How Much Is My Chapter 13 Payment Going To Be? Part 1: Equity appeared first on Baltimore Bankruptcy Lawyer.

I have to file a Chapter 13 case. How long am I going to have to be involved in that? Well the answer to that question is, like so many lawyers say, it depends. It depends upon your income, your assets, and whether not you have priority non-dischargeable claims. Ideally if your income is below the median income from your state, then you can have a 36-month plan.

For most other people, and really for most debtors, the Chapter 13 plan goes 60 months, and that’s how long you have to pay over all of your net disposable income to a Chapter 13 trustee in order to discharge your dischargeable debits.

The post How Long Does Chapter 13 Bankruptcy Take? appeared first on Baltimore Bankruptcy Lawyer.

Do they count my Social Security income in Chapter 13 to determine how much I have to pay to the trustee? No, they’re not allowed to count Social Security, retirement, or disability payments in your Chapter 13 bankruptcy case. This is really important, because sometimes you’re going to want to use some of that Social Security income as part of your Chapter 13 case anyway, and that’s usually if you have priority tax debts, that need to be paid in full, or if you have too much non-exempt equity in your assets that you have to buy back from your creditors as part of the Chapter 13 process.

Although, they can’t make you give up your Social Security income, you can use that Social Security income to prove to the court that you’re able to make the payments.

The post Do I Have To Give My Social Security Income In My Chapter 13 Case? appeared first on Baltimore Bankruptcy Lawyer.

Youre’ going to file Chapter 13 but you think your income might change over the next 60 months. Will that cause your plan payment to change?

The answer to that question is … probably. You have to submit tax returns usually within 45 days after you’ve filed them to the Chapter 13 trustee for every year while you’re in bankruptcy. That gives the trustee the opportunity to see if you’re income has significantly improved from the time when you got your plan confirmed.

This is important because under the bankruptcy laws, you need to pay over all of your net disposal income during 60 months after you file bankruptcy in order to get a Chapter 13 discharge. So if your income is increasing during that time, the Chapter 13 trustee needs to monitor that to make sure that you are complying with that law.

On the other side of the coin, if your income goes down during that 60-month period, you can petition the court to reduce your Chapter 13 payments because of a change in your circumstances.

The post Will Your Chapter 13 Plan Payment Go Up If You Get A Raise? appeared first on Baltimore Bankruptcy Lawyer.

Why would you file a Chapter 13 case? There are five reasons. Here’s the first one:

Sometimes your assets have too much value, and if you were to file a Chapter 7 case, then the trustee would sell your assets and you would lose them. Chapter 13 gives you the opportunity, if the price isn’t too high, to buy back the value of your assets from your creditors over a 60-month plan.

This makes it more affordable and more reasonable for you to maintain your assets while you reorganize your debts and get the relief that bankruptcy provides.

The post Why Chapter 13? Part 1: Keep The Assets You Want appeared first on Baltimore Bankruptcy Lawyer.