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How much does a Chapter 13 Cost?

Often our office charges a down payment on a Chapter 13 Bankruptcy of as little as $565.00.  This consists of the costs to file the case and an additional $155.00 to our office.  The Court in our district sets a “no look fee.”  This fee is $3,700.00 plus the costs to file your case or a total fee of $4,110.00.

What a “no look fee” means is that the Court allows that as a fee for our services without subsequent application for additional compensation.  Almost all attorneys in our district charge a fee of $3,700.00 for a Chapter 13 Bankruptcy.  The difference you will find between attorneys is what is charged as a down payment and what costs are included in that down payment.

90% of Chapter 13 cases filed with out office pay only the no look fee with little to no additional out of pocket expense.  However, all time in our office is billed at $350.00 per hour for attorneys and $150.00 per hour for legal assistants.  If your case is more complex than an average simple uncontested Chapter 13 case our office will apply for the additional compensation with the Court.  Presuming approval of the Application for Additional Fees, our office will work out arrangements with you for repayment including possibly adding these amounts into the remainder of your plan.  Again, 90% of case filings with our office do not exceed the Court’s “no look fee.”

For more information on the costs associated with a Chapter 13 Bankruptcy contact our office and one of our attorneys will meet with you to discuss any issues that you have and help you formulate a game plan as to what direction is the best for you and your family.

My Vehicle was repossessed can bankruptcy help me get it back?

Yes.

A Chapter 13 Bankruptcy can even help you retrieve a vehicle from a Creditor who has already repossessed your vehicle.

In order to retrieve and keep your vehicle through a Chapter 13 Bankruptcy you will need sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%.  Further, the Chapter 13 Trustee, the person who collects and disburses your payments to creditors, charges a fee set by the Court at 10% of each one of your payments.  This effectively makes the interest rate around 15% on the outstanding principal balance.

Further, a Chapter 13 plan can require payments on other debts, i.e. IRS, Child Support, Homes, Unsecured Creditors etc.  It may be that your plan would require payments in addition to supporting the principal and interest due on your vehicle.  For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what options you have to retrieve and retain your vehicle.  Time is of the essence when filing to retrieve a vehicle.  Once the vehicle has gone to auction and sold and a Bankruptcy has not been filed before hand a Bankruptcy will not help you retrieve the vehicle.

Can I purchase a vehicle while in a Chapter 13 Bankruptcy?

Yes, it is often possible to purchase a vehicle while you are in a Chapter 13 Bankruptcy.  In order to purchase a vehicle, it is necessary to get the Court’s permission first.  There are a few things that you will need to do in order to receive the Court’s Approval.

1). The Court will not grant permission to purchase any type of luxury vehicle, i.e. Mercedes, BMW, Lexus, Etc. The Court sets limits on the amount that can be financed.  This limit is $21,000.00.  The Court sets limits on the amount of the monthly payment.  This limit is $500.00 per month.  The Court sets limits on the amount you can pay in interest on the loan. This limit is 21%.

2). Once you have picked out a vehicle that fits the above parameters, then you will need to approach the dealership about the vehicle that you are interested in.  You will need to work out terms that fit within the above Court restraints.  You will need the dealership to provide you with a proposed sales contract.  You CANNOT sign a contract for purchase until the contract is approved by the Court.

3). Once steps 1 and 2 have been completed, you will need to file a Motion to Incur Post Petition Debt in your Bankruptcy Proceeding.  You will need to update your income and expense schedules with the Court.  You do this by providing your Attorney with current paystubs for all members of your household that are working or receive income and a list of your current expenditures.  This Motion is usually outside of the constraints of a simple uncontested Chapter 13 Bankruptcy, and attorneys in our district are allowed to charge an additional fee of $400.00 for the work expended.

4). Once the Motion has been filed with the Court, it will take approximately 30-45 days to receive an order allowing the purchase to be finalized.  You will then take the signed order back to your dealership and purchase a vehicle that fits within the constraints of the Order signed by the Court. This does not have to be the vehicle in the proposed sales contract provided; it must just fit the constraints as outlined above.

5). There are many financial aspects to consider when purchasing a vehicle especially while in a Chapter 13 Bankruptcy. First and foremost, can you afford the additional payment in addition to your current expenses as well as your trustee payment?  Second, no reduction to your trustee payment will apply even if your car payment increases. The post-petition debt (meaning incurred after filing the case) incurred to purchase the vehicle is not deductible when evaluating any distribution to unsecured creditors.  Finally, do you believe that your income is secure enough to see the car loan contract through completion?  Since the debt is post-petition, you will not be able to surrender the vehicle through the pending bankruptcy and receive a discharge as to that debt if issues with payment arise.  This could result in putting a Debtor back into a similar position as they were when the case was filed.  The result of a Chapter 13 Bankruptcy should be a fresh start so please ensure that you discuss the ramifications of purchasing a vehicle with your Bankruptcy Attorney.

Do I have to give up my home in Chapter 13 Bankruptcy?

The simple answer here is, no.  In fact, most people file a Chapter 13 Bankruptcy in order to keep their home and save it from foreclosure.  If you are current on your mortgage payments, the Chapter 13 typically has no effect on your home.  You simply continue to make the mortgage payments directly to the Mortgage company. If you are behind on your home when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is a repayment and reorganization plan.  The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.

In order to keep your home through a Chapter 13 Bankruptcy, you will need to be able to make your regular monthly mortgage payment in addition to repaying any arrearage owed to the mortgage company over a 36-60 month period.  Our District, The Northern District of Texas, utilizes the “Conduit Program”.  This simply means that your regular principal and interest payments are repaid through your Bankruptcy Payment rather than directly by you to the mortgage company.

The simple answer here is, yes, a Chapter 13 Bankruptcy can help you retain your home if you are facing foreclosure.  There are other factors to consider when calculating what you would need to repay through your plan and whether or not you can afford to make those payments and retain your home.  For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what your options are to keep your home.

Do I have to give up my vehicle in a Chapter 13 Bankruptcy?

The simple answer here is, no.  If you are current on your car payments, the Chapter 13 typically has no effect on your car. You simply continue to make your car payments directly to your car lender.  If you are behind on your car when you file bankruptcy, read below on how to keep your home in Chapter 13 Bankruptcy:

Chapter 13 Bankruptcy is a repayment and reorganization plan.  The type of person who files a Chapter 13 Bankruptcy is someone who is behind on a house, car, IRS payments, etc. and wants to keep the collateral and repay the amounts that are past due.

In order to keep your vehicle through a Chapter 13 Bankruptcy you will need to be able to at minimum have sufficient income to repay the amount that is owed on the vehicle plus interest at the LIBOR rate plus 2%.  Further, the Chapter 13 Trustee the person who collects and disburses your payments to creditors, charges a fee set by the Court of 10% of each one of your payments.  This effectively makes the interest rate around 15% on the outstanding principal balance.

The simple answer here is, yes, a Chapter 13 Bankruptcy can help  you retain your vehicle if you are facing repossession.  A Chapter 13 Bankruptcy can even help you retrieve a vehicle from a Creditor who has already repossessed your vehicle.  There are other factors to consider when calculating what you would need to repay through your plan in addition to your vehicle and whether or not you can afford to make those payments and retain your vehicle. For a more in depth analysis you can call our office and one of our attorneys will meet with you to help determine what options you have to retain your vehicle.

Do I lose my tax refund in a Chapter 13 Bankruptcy?

The court allows a Debtor in a Chapter 13 Bankruptcy to keep $2,000.00 of any tax refund with no questions asked.  The Court and Trustee’s often allow a Debtor to retain even more than the Court provided $2,000.00 due to credits such as the Earned Income Credit and certain other tax credits and exemptions.  Finally, if a Debtor has unexpected expenses, home repairs, vehicle repairs, medical bills, etc. that are outside of the constraints of what a normal budget can provide for the Court will often allow additional funds to be kept often times the full amount of the refund.

The Process for Tax Returns and Refunds in a Chapter 13 Bankruptcy:

1). Prepare and file your tax return with the IRS through the normal manner with which you file a return.

2). Receipt of your tax refund.  Upon receipt you may spend up to the $2,000.00 allowed by the Court until you hear further from your case trustee/ attorney.

3). Your Attorney will provide a copy of your tax return to your case trustee. Upon receipt your case trustee will review your tax return and send a letter to you and your attorney stating what if anything they believe is owed to the Trustee from your tax refund.

4). The trustee will file a Modification of your Chapter 13 Plan to provide for the additional funds over $2,000.00 that are received in your tax refund.  At this point you have several options:

a).  Send the amount the Trustee is requesting from your Tax Refund directly to your case trustee.  If you have no unexpected expenses to plead to retain more of your tax refund and you have kept a hold of the funds in excess of $2,000.00 this is the route you will take.

b).  You have unexpected expenses, i.e. house repairs, car repairs, medical expenses, etc. that you believe warrant retention of funds in excess of the $2,000.00.  In order to plead this to the Court your attorney will require information from you.  They will require funds to complete the work on your behalf (usually $400.00). They will require receipts and or estimates for repairs that total the amount of the tax refund you are seeking to keep. Remember if you are seeking to keep your entire tax refund you will need to provide receipts/ estimates that total the entirety of your tax refund, not just the amount in excess of $2,000.00.

c).  You have no unexpected expenses and have already spent the tax refund funds in excess of $2,000.00.  If this is the case you should approach your attorney about filing a Chapter 13 Plan Modification of your own to spread that amount out over the remainder of your Chapter 13 Plan presuming you do not have the funds available to pay the Trustee one lump sum in the amount that is owed.  There are usually additional attorney fees of $400.00 charged by attorneys for a Chapter 13 Plan Modification.

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