Chapter 13 bankruptcy: what are his alternatives (see details)
Asked by
Strauss (
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August 2nd, 2013
Another friend has approached me for some advice, and I’d like to get some input from the collective.
It seems this friend made some poor financial choices over the past few years, and coupled with the general state of the economy, found himself in a situation that necessitated his filing of a Chapter 13 bankruptcy. This type of bankruptcy does not allow for liquidation and discharge of debts (as a Chapter 7 would), rather it is a reorganization of debt, administered by a court appointed trustee.
My friend missed two payments, and received a notice of the trustees motion to dismiss, claiming (justly so) that his “failure to comply with requirements…” (etc.) is prejudicial to creditors, and so the bankruptcy case should be dismissed.
His question to me (which I’m passing on to the collective): What are the alternatives?
Would the trustee allow the debtor to make payment to make the plan current? Or would the bankruptcy be dismissed, and all debts considered due? Or can the bankruptcy be converted to a Chapter 7?
I’ve already given what in my humble opinion is my best advice. I wonder if anyone out there has any other advice from experience.
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4 Answers
He needs to call his bankruptcy lawyer as soon as possible and make arrangements to pay the missed payments. He may have just a few days from the day he calls to make the payment, but it still may be possible to make the plan current. If not, it will be dismissed. I’m not sure if it can be converted to a Chapter 7.
Get a lawyer that handles bankruptcies and do it now.
If you snooze ( don’t pay on time ), you lose.
Keep this in mind. In chapter 13, the attorney will charge you by the minute for every single time you contact them, whether by mail or by phone. Phone calls are charged from the moment they pick up, even if they place you on hold for 15 minutes before you get to talk to them.
When it’s time for your commitment to end, you will be required to continue payment until you contact them and demand they release you, or maybe after an ungodly amount of time, they’ll get around to it on their own. You’ll be charged for that, and for the release as well. Eventually you’ll get your refund, but only after they take out their “costs”.
It’s kind of scammy, but that’s how it works.
@snowberry My husband and I just made our last payment in March towards our Chapter 13. We never had any of the issues you mentioned. We weren’t charged per call and our lawyer was very helpful. The entire process went smoothly and by the book. Our lawyer took care of everything and our payments just stopped when the process was over. We never had to demand a thing. A letter of release was sent to us at the end. It’s all behind us now.
I only mention this because our experience was the complete opposite of what you described. Did we just have an amazing lawyer or what? Interesting.
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