Serrano Law Firm, LLC

Call and Speak to a Person, Not a Machine

Connecticut Personal Injury & Accident Lawyer Blog

860 236-9350  ▪  800 856-6400

690 Flatbush Avenue, West Hartford, CT 06110-1308

27 Holmes Avenue, Waterbury, CT  203 756-6100

      Skill                            

   Determination       

                        Experience 

Home
Attorney John Serrano
Personal Injury Accidents
Bankruptcy
Business
Criminal Law & DUI
Divorce & Family Law
Immigration
Real Estate
Social Security Disability
Waterbury Law Office
CONTACT US
Our Staff
Portuguese Pages
Spanish Pages
Site Map

690 Flatbush Avenue West Hartford, CT  06110-1308

860 236-9350             800 856-6400  toll free     860 523-9101  fax

27 Holmes Avenue Downtown Waterbury 203 756-6100

 

Chapter 13 Bankruptcy Information

Filing Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Procedure

Getting Your Bankruptcy Plan Approved

Debts Chapter 13 Bankruptcy Does Not Cancel

Chapter 13 Super Bankruptcy Discharge

Bankruptcy Discharge Requirements

Hartford Bankruptcy Attorney, Waterbury Bankrtuptcy Attorney - Debt Relief by Filing Bankruptcy

    Most people file Chapter 13 Bankruptcy to keep from losing their home to foreclosure because they have fallen behind in their mortgage payments and need time to get caught up.  Filing a Chapter 13 bankruptcy case is a very effective way for you to save your home from foreclosure for a number of reasons:

bullet

Your mortgage holder is forced to accept your repayment Plan as long as you make your monthly mortgage payments and plan payments on time and do the other things required by bankruptcy law.

bullet

You may be able to reduce the interest charged on your arrearage (overdue payments), saving you substantial money.

bullet

You may be able to cancel some or all of your unsecured debt, thereby freeing up money for you to use to get caught up on your mortgage.

bullet

You may be able to cancel a second mortgage if the value of your home is less than the amount of your first mortgage.

bullet

You may be able to reduce the amount you have to pay back on your car loan if your loan is more than 2 years old.

    Some people file Chapter 13 Bankruptcy because they have too much debt but their income is to high to file a Chapter 7 Bankruptcy under the Means Test of the 2005 Bankruptcy Reform Act.  Chapter 7 bankruptcy is used to cancel all debts that can be cancelled under the bankruptcy law, but limits the amount of property that a person can keep.  (Read about the differences between Chapter 7 and Chapter 13.)

     As soon as you file a Chapter 13 Bankruptcy, your creditors (the companies and people you owe money to) have to stop trying to collect their debts.  They cannot call you, send you letters, start or continue foreclosure or other lawsuits, take your wages or property, or do anything else.  You are protected from your creditors by an order, called the Automatic Stay, that enters immediately when you file.  The bankruptcy court sends a notice of the Automatic Stay to your creditors.  Your creditors can only try to collect their debts by filing papers (called a Motion for Relief from Stay) in bankruptcy court asking permission.  The bankruptcy court can only give them permission under certain circumstances (for example, your mortgage lender can get permission if do not make your mortgage payments after you file).

    To qualify for Chapter 13, you must have regular income from wages, a business, Social Security or other sources, including contributions by family members.  The heart of a Chapter 13 Bankruptcy is the Chapter 13 Plan.  This spells out how you plan to get caught up on your overdue mortgage and to make other required payments.  Your Plan must meet certain requirements to be approved by the bankruptcy court. 

    Under your Plan, you make a monthly payment to the Chapter 13 Bankruptcy Trustee.  The amount of your payment is based on your disposable income, which is what is left over from your net income after you pay your necessary living expenses.  The Bankruptcy Trustee distributes your payments among your creditors according to your Plan.  Your Plan will last from 3 to 5 years.  If you cannot keep up with your payments, you can have your case dismissed or converted to a Chapter 7 Bankruptcy (if you qualify for Chapter 7 under the Means Test).

 

(Numbers in blue refer to Bankruptcy Code sections.)

Filing Chapter 13 Bankruptcy

     Not everyone can file Chapter 13 bankruptcy.

bullet

You cannot file if you had a bankruptcy case dismissed during the last 180 days (about 6 months) for willful failure to obey bankruptcy court orders or to prosecute the case.  109(g)

bullet

You cannot file if you asked for a bankruptcy case to be dismissed during the last 180 days (about 6 months) and a creditor had filed a motion for relief from stay in bankruptcy court109(g)

bullet

You cannot file if you have more than $1,149,525 in secured debt or $383,175 in unsecured debt.  If your debt exceeds these amounts, you may consider filing a Chapter 11 Bankruptcy, which also involves a repayment plan but which is much more expensive and difficult than Chapter 13 bankruptcy109(e)

bullet

You cannot file a Chapter 7 Bankruptcy, but must file Chapter 13 bankruptcy if your income is too high to meet the new Means Test put into place by the 2005 Bankruptcy Act.  Under the test, you may have to file Chapter 13 bankruptcy if your annual household income is above the Connecticut median ($99,440 for a household of 4;  $56,773 for a household of 1).

    You can file a Chapter 13 Bankruptcy buy you will not be able to get a discharge if:

bullet

You received a discharge* during the last 4 years in a Chapter 7 Bankruptcy1328(f)

bullet

You received a discharge* during the last 2 years in a Chapter 13 Bankruptcy.  1328(f)

*(At least one federal appellate court has held that a discharge cannot enter until 2 years or 4 years have passed since you filed the 1st case, not since you got the discharge.)

 

 

Confirming Your Chapter 13 Bankruptcy Plan

    The hearing for your Chapter 13 Bankruptcy Plan to be confirmed (approved) is the most crucial part of the Chapter 13 bankruptcy procedure.  We will make every effort to make sure ahead of time that the bankruptcy judge will approve your Plan.  We start our efforts when we first meet with you.  We continue those efforts before we file your bankruptcy case by making sure everything will be in order to have your Plan confirmed once we do file.

    At the confirmation hearing, the bankruptcy judge usually follows the recommendation of the Chapter 13 Trustee as to whether your Plan is reasonable and should be confirmed.  We will work closely with the Trustee's office before the hearing to make sure they have all the information required to make a favorable recommendation.

    Your Plan must propose to do the following:  1322

bullet

Provide that all or as much of your future earnings as necessary will be turned over to the Trustee to make the Plan payments.

bullet

Pay your priority debts in full.  The most common of these debts are:  507
bullet

Domestic support obligations (alimony and child support).

bullet

The Trustee's administrative expenses (usually 10% of the Plan payments).

bullet

Ordinary expenses from running a business after filing the bankruptcy case.

bullet

Wages and sales commissions up to $10,000 and employee benefit plan contributions up to $10,000 due any employees for the 180 days before filing the bankruptcy case.

bullet

Rental security deposits from tenants up to $1,800 each.

bullet

The following income taxes:
bullet

Payable for any return due during the 3 years before filing the bankruptcy case.

bullet

Assessed within 240 days before the bankruptcy case was filed.

bullet

Assessable after the bankruptcy case was filed.

bullet

Property taxes payable within one year before the bankruptcy case was filed.

bullet

Any taxes withheld from employees or sales taxes collected in running a business.

bullet

Claims for personal injury or death caused while driving while intoxicated.

bullet

Get caught up on any arrearages (overdue amounts) on mortgages, car loans and other secured debts.

bullet

Pay any taxes that become due during the plan.

bullet

Optionally divide any secured debts into two parts, a secured part equal to the value of the collateral securing the debt (house, car, etc.) and an unsecured part equal to the rest of the debt.
bullet

A motion must be filed with the bankruptcy court to determine the value of the property.  506

bullet

The loan gets split into 2 parts, the secured part is equal to the value of the property and the rest is treated as unsecured debt.  If the Plan pays unsecured creditors less than 100%, then the unsecured part of the loan is paid the same percentage amount as the other unsecured debt.

bullet

This cramdown cannot be done for:  1322(b)(2);  1325(a)
bullet

A mortgage that is secured only by a home.  (Congress is considering changing this).

bullet

A car loan taken out less than 2 years before the bankruptcy case was filed.

bullet

A loan to purchase an item (other than a car)  taken out less than 1 year before the bankruptcy case was filed.

    These are the requirements for having your Plan confirmed:  1325

bullet

You must be up to date with your Plan payments, which you would have started making one month after you filed bankruptcy.

bullet

You must be up to date with your payments to any secured creditors, including your mortgage holder.

bullet

You filed your bankruptcy petition and your Plan good faith.

bullet

Your Plan must arrange to pay your unsecured creditors at least as much as they would get if you filed a Chapter 7 Bankruptcy.

bullet

One of the following is true as to each of your secured creditors whose claims have been allowed:
bullet

 They have accepted the Plan.

bullet

They will keep their lien until their debt is fully paid or until your discharge enters and they will be paid the allowed amount of the part of their claim that is secured.

bullet

You have given them the collateral (real estate, car, furniture, etc.) that secures their claim.

bullet

It is reasonably probably that you will be able to make all your Plan payments.

bullet

You are up to date in any payments you are making on a domestic support obligation (child support or alimony).

bullet

You have filed all of your federal, state and local tax returns.

bullet

If the trustee or an unsecured creditor objects to confirmation, your Plan proposes to pay all your unsecured creditors in full or to pay them as much of your disposable income (your after-tax income less the total of payments on secured debt, case administration and Trustee fee payments, payments on priority debts, reasonable living expenses, reasonable business operation expenses, and charitable contributions up to 15% of your gross income).

bullet

The length of your plan must be:
bullet

5 years (or shorter if you are paying your unsecured creditors in full) if your household income is above the Connecticut median income, .

bullet

At least 3 years (or shorter if you are paying your unsecured creditors in full) if your household income is below the Connecticut median income, .

    If the bankruptcy judge decides not to approve your Plan, the judge usually will order that your case be dismissed or converted to a Chapter 7 Bankruptcy (if the Means Test allows you to be in Chapter 7).  If you are trying to save your home from foreclosure, having your bankruptcy case dismissed or converted will increase the chances that you lose your home.  This is because:

bullet

If your bankruptcy case is dismissed, you may be barred from filing bankruptcy again for 6 months or longer.  This will give the bank enough time to complete the foreclosure.

bullet

Even if you are not barred from filing bankruptcy again, the automatic stay that keeps the bank from foreclosing will only last 30 days if you file bankruptcy again unless you have very convincing evidence that your circumstances have changed and you will be able to propose and complete a Chapter 13 Plan.

bullet

If your case is converted to Chapter 7, the automatic stay only lasts a few months until your discharge enters.  The bank may even not have to wait that long if they successfully file a motion for relief from stay with the bankruptcy court.

    Sometimes, despite everyone's best efforts, your Chapter 13 Plan cannot be confirmed or would require you to make such high payments that it would cause you and your family to suffer hardship while you are struggling to make the payments.  If this is the case, we will give you a straight, honest assessment and give you other recommendations.

 

Chapter 13 Discharge Requirements

    You have 2 goals in a Chapter 13 Bankruptcy:

bullet

To get caught up on any overdue mortgage or loan payments to save your house or your car.

bullet

To have the bankruptcy court enter a discharge canceling your other debts.  1328

    The bankruptcy court will give you a discharge if you complete all your Chapter 13 Plan payments.  To obtain your discharge, you must satisfy the following requirements:

bullet

You are up to date in any payments you are making on a domestic support obligation (child support or alimony).  1328(a)

bullet

You have completed an instructional course concerning personal financial management.  111;  1328(g)

bullet

There is no case going on against you in which someone claims you committed a crime, intentional tort or reckless act that caused serious physical injury or death during the last 5 years.  1328(h)

    If you have been unable to complete all of your payments, you may still get a discharge by convincing the bankruptcy judge at a hearing that you have made your best effort to make payments.  If the bankruptcy judge agrees, your discharge will be limited to the same type of discharge available in a Chapter 7 Bankruptcy.  This means you will not be able to cancel the super discharge debts that can ordinarily be cancelled in Chapter 13 but not Chapter 7.  To qualify for this limited, best effort  or hardship discharge, you must prove the following three things:  1328(b)

bullet

(1)  Because of your particular circumstances, it would be unjust to blame you for not making all your plan payments.  Although each bankruptcy case is different, the following are some of the things a bankruptcy court may consider:
bullet

Your efforts to earn income.

bullet

If you had any unforeseen circumstances such as medical expenses or illness.

bullet

How much of the payments you made.

bullet

Why you were unable to pay your debts.

bullet

Whether your debts resulted from the purchase of essentials or from extravagant consumerism.

bullet

How many dependents you have.

bullet

Whether you filed bankruptcy before.

bullet

(2)  You paid your unsecured creditors at least as much as they would have received if you had filed a Chapter 7 Bankruptcy.

bullet

(3)  You are unable to reasonably modify your plan.

 

Debts Chapter 13 Bankruptcy Does Not Cancel

bullet

Credit obtained by fraud or false pretenses.

bullet

Recent cash advances.

bullet

Recent purchases of luxury goods.

bullet

Those debts not listed in your bankruptcy schedules.

bullet

Alimony and child support.

bullet

Student loans (unless hardship).

bullet

Personal injury or death caused by driving while intoxicated.

bullet

Taxes you withheld from your employees.

bullet

Sales taxes you collected in your business.

bullet

Income taxes if any of the following are true:
bullet

You filed the return during the 2 years before you filed bankruptcy.

bullet

Your return was due during the 3 years before you filed bankruptcy.

bullet

Your tax liability was assessed during the 240 (about 8 months) before you filed bankruptcy.

bullet

You never filed a return.

bullet

You filed a late return during the 2 years before you filed bankruptcy.

bullet

You filed a fraudulent return.

bullet

Property taxes required to be paid during the year before filing bankruptcy.

bullet

Restitution or fines required by a criminal sentence.

bullet

*Fiduciary fraud.

bullet

*Embezzlement or larceny.

bullet

*Willful and malicious injury to persons.

* Debts due to fiduciary fraud, embezzlement, larceny and willful or malicious injury are discharged unless the creditor requests a hearing and proves that the act occurred.

 

The Chapter 13 Bankruptcy "Super Discharge"

    These are the debts that you can discharge in a Chapter 13 Bankruptcy but not in a Chapter 7 Bankruptcy:

bullet

Willful and malicious injury to property.

bullet

Income tax interest and penalties which became due after you filed bankruptcy.

bullet

Divorce property settlements or decrees.

bullet

Those debts that were or could have been listed in a prior bankruptcy case in which were denied or waived a discharge.

bullet

A loan used to pay a tax that you could not discharge.

 

Chapter 13 Bankruptcy Procedure

bullet

Complete credit counseling109(h)

bullet

Meet with bankruptcy attorney, review disclosures.

bullet

File bankruptcy petition, schedules, Plan, income statements and other documents.

bullet

Start making your Plan payments.

bullet

Attend meeting of creditors341

bullet

Attend bankruptcy court hearing to have your Plan confirmed. 

bullet

Make your Plan payments over 3 to 5 years.

bullet

Receive your Chapter 13 bankruptcy discharge.

bullet

Relax (you earned it!).

When You Need a Connecticut Bankruptcy Lawyer,

Rely on Us for Skill, Determination and Experience.

Connecticut Debt Relief By Filing Bankruptcy

Congress has designated the Serrano Law Firm a debt relief agency.

We help people file for debt relief under the Bankruptcy Code.

Spanish Spoken  CT Bankruptcy Abogados, Hartford, Waterbury, New Britain

Hablamos Espanol  Hartford, Waterbury, Meriden Bankruptcy Lawyer - Spanish Spoken

Go To BANKRUPTCY Home Page

Attorney John Serrano - Personal Injury, Social Security Disability, Divorce, Bankruptcy, Immigration, Workers Compensation.  Hartford, Waterbury

Please note that our law firm's website is designed to provide only general legal information.

This information is not intended to be legal advice for your individual situation.

Call us for personal injury, Social Security, divorce, bankruptcy, immigration, workers compensation and criminal cases.

Portuguese  Falamos Portugues - Advogados, Hartford, Waterbury  Brasil (Brazil) - Advogados Hartford, Waterbury, Danbury      Spanish  Puerto Rico - Se Habla Espanol - Abogados Hartford, Waterbury  Peru - Hartford Abogados de Inmigracion  Mexico - Connecticut Abogados Hartford, Waterbury

Attorney John Serrano