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I'm behind on mortgage and need to save my home. But I was advised to do a chapter 7 and once it's discharge do a chapter 13 right away. My question is how come it cant be discharged once the arrears are paid in full
What you're describing, where you file a Chapter 7 case and follow it up with a Chapter 13 case, is frequently described as a "Chapter 20" case. There may be many reasons why your lawyer advised you to take this approach, and I don't have enough info here to know what the reason(s) were in your particular case, but here is the basic idea behind Chapter 20:
When you get your Chapter 7 discharge, your obligation to pay your unsecured debts will be completely erased. That's what Chapter 7 is for. But what Chapter 7 doesn't give you is long-term protection from the mortgage holder. That's because the mortgage doesn't get discharged in the Chapter 7 (at least not the bank's rights to foreclose if it doesn't get paid), and because a Chapter 7 case usually only lasts around 3 months (usually not long enough to get caught up on mortgage arrears). So when the Chapter 7 ends, you turn around and file a Chapter 13 case, which can last/give you the court's protection for up to five years. (Hopefully that's long enough for you to get caught up on the mortgage arrears.) You won't get a discharge at the end of that Chapter 13 case (you won't be entitled to a discharge in a Chapter 13 after a Chapter 7 until 4 years elapse between the filings of the cases), but that's OK; you have nothing left to discharge in the Chapter 13 anyway because it all got discharged in the Chapter 7. Moreover, you're not in it for the discharge; you're in it for the protection. So you use the Chapter 13 plan to pay off the mortgage arrears over 5 years (and also whatever non-dischargeable debt survived the Ch 7, e.g. taxes). So the idea is that when the Chapter 13 is finished, your unsecured debt will all be gone via Chapter 7, and the arrears will all be paid off via Chapter 13.
Hopefully, that helps, but on re-read, your question seems to be: "Why will I still owe the mortgage? Doesn't it get discharged?" That's a more complicated question, but very important to understanding Chapter 20.
When you take out a mortgage, the bank has two sets of rights: 1) the right to collect money from you as an individual (the so-called "in personam" rights), and 2) the right to foreclose the property if they don't get paid (the "in rem" rights). In your Chapter 7 case, their "in personam" rights are subject to discharge and will be erased. The bank will not be able to collect from you, as an individual. (That's why the mortgage may disappear from your credit report, for example). However, their "in rem" right to foreclose if they don't get paid is NOT subject to discharge. That's because it's a property interest, and fundamentally different from the contract-based "in personam" interest, and the Bankruptcy Code does not give the court the power to alter it. So even though the bank can't collect from you for nonpayment, they CAN take the house for nonpayment. So if you want to keep the house, you have to make sure they keep getting paid.
I assume that a substantial amount of the mortgage will remain unpaid at the end of the Chapter 13 case. And even though you don't owe it personally, and even though the arrears will be paid off, you'll have to continue making the regular monthly payments, because if you fall into arrears again you'll be back into the position of the bank threatening foreclosure.
I hope this helps. Good luck.See question
I called a collection agency and they said that the debt was cancelled. Because it was past the statute of limitations. However, they validated the debt with me afterwards. It said they are reporting my dispute to credit bureaus, if applicable. It...
They may have "cancelled" the debt insofar as they have written it off for their own accounting purposes. However, that doesn't mean you don't owe it, and it doesn't mean they (or some subsequent collector) can't try to collect from you. What does stop their right to collect is the passage of the statute of limitation. After the statute of limitations passes, they can only send you letters saying something like "We can't sue you for this, but pretty please send us some money voluntarily," and if it ran for the original creditor, it also ran for any collector they sell it to. Be careful about validating the debt; if you do so in a signed writing, it can restart the statute of limitations (see Cal. Code of Civ. Proc. § 360).
Another thing that can stop their right to collect is if they actually forgive your liability on the debt (as opposed to cancelling it for their own accounting purposes). But if the debt is forgiven, you WILL be issued a 1099-C. However, if you are insolvent at the time of forgiveness (i.e. your debts exceed your assets), you can file a Form 982 & you will not have to pay taxes on the forgiveness income.See question
Creditor sued and won money judgment default 2007 for 23K. Abstract of judgment (involuntary lien) filed with the County Recorder office shortly after; (6 months or so). No property to attach - (did not own any property). 2008/2009 Writ of E...
The lien only attaches to real property (real estate), and you have none, so there is nothing for the lien to attach to. Therefore, you will not be able to file a 522(f) motion to avoid the lien. However, at the end of your Chapter 7, your liability on the underlying debt will be $0. Therefore, the creditor should be willing to execute a Release of Abstract of Judgment for you to file with the county. If they won't, I would treat that as a discharge violation.See question
Judgement against me for creditor loan. Wage garnishment started two paychecks ago. Today employer gave me a letter from sheriff returning the money stating papers were not successfully served. File closed out as unsuccessful. Papers will have to ...
Congratulations; this is good news! You are free to proceed and use that money as you otherwise would. However, be aware that the creditor will eventually try again & get it right, and that when they do, the money won't be returned. The most effective way to stop the garnishments and eliminate your liability on the judgement will probably be to file a case with the Bankruptcy Court, so you should start interviewing lawyers now. Good luck!See question
If a debt collector says they are filing a lawsuit is it illegal for the person in debt to threathen bankruptcy (with no intention of filing) in order to dissuade a lawsuit or get a favorable settlement?
No, it is not illegal to tell a creditor that you are considering filing a bankruptcy case, and that if you do, that creditor will get nothing. However, in my experience, doing so rarely has the desired effect of getting you a better settlement. The creditor is more likely to "call your bluff" and tell you to go ahead with your bankruptcy case.See question
I am trying to find the best way to resolve my debt, or make payments on it.
As Attorney Bunce mentioned, borrowing to get out of debt seldom works. Also, I'm not a big fan of "debt settlement" plans; the in my experience the companies that offer such services rarely settle anything. What's more, they're not always clear on how much they collect in fees, and the fact that your creditors can still sue you while you're in the plan. If you truly want a fresh start, you should at least look into filing a case with the Bankruptcy Court. I personally started representing consumers in bankruptcy cases because I found it to be the best, cheapest, fastest way to get real relief. Call around. Most bankruptcy lawyers offer free initial consultations, and at that consultation, he or she will be able to advise you on what kind of case to file, and what outcomes to expect. Good luck!See question
I filed chapter 7 bankruptcy a year ago and discharge papers say "Will pay as agreed" but didn't sign reaffirmation. The account says on my credit report that it's in chapter 7. I can't make payments anymore and want to do voluntary repossession. ...
I'm not sure where in the papers it would say "pay as agreed." (Perhaps on your Statement of Intent, you indicated you wanted to retain the car & keep paying as agreed, but without signing a reaffirmation agreement?) But if you did not sign a reaffirmation agreement, you will not be liable for the balance.See question
If filing for chapter 7, we own several vehicles but want to completely except 2 & keep, so my spouse & I can get to work & appts. One vehicle is paid for with a value of approx $800 & the other is not, has a value $5000, with loan balance of $400...
If you do not have a home with equity, you are probably using the §703 exemptions (as opposed to §704, which you'd be using if you did have equity in your home). The §703 exemptions have both a vehicle exemption ($5,300) & a "wild card" exemption ($26,800). You would use the vehicle exemption to cover the $1000 equity in the second vehicle, and the wild card to cover the $800 value of the first. Assuming all your other assets that get covered by the wild card amount to less than $26,000, there won't be any liquidation by the trustee, and there will be no need for you to pay anything to the trustee.See question
I have student loans . a lot of them makes my credit horrible. Will filing bankruptcy erase them. Will it help. What chapter do I file. Does it cost . thanks in advance
The issue is not the debt being cleared off "your credit report." Rather, the issue is whether your obligation to pay the debt is, in bankruptcy terms, "discharged." If a debt is discharged, then the credit report must accurately reflect that fact.
So if your question then is whether your student loans will be discharged in a bankruptcy case, the answer (as the other lawyers have said) is "probably not." It is very difficult to discharge student loans in a bankruptcy case. You have to show 1) that if forced to repay, you wouldn't be able to maintain a minimally adequate standard of living, 2) that there are additional circumstances indicating this sate of affairs is likely to continue, and 3) that you have made good faith efforts to repay in the past. Very few people meet this standard, and usually #2 is the sticking point.
But if your question is "will bankruptcy help," the answer is "maybe." For example, if you are being garnished and the lender won't agree to a reasonable repayment plan (if they're private loans), or if you don't qualify for income-driven repayment (if they're federal), you might be able to use a Chapter 13 case to force what is essentially a 5-year forbearance on them.
So all in all, you need to talk to a lawyer. Your situation is unique, and a lawyer would need more facts about your specific situation to help you figure out if & how the Bankruptcy Court can help. Does it cost? It will not be free, but a lawyer will lay out what would be accomplished and what the fees would be, and you can make the decision if it makes sense for you.See question
I wanted to know if a married couple can file for bankruptcy separately? Meaning only one person file for bk but have the debt dissolved?
A married person can file a bankruptcy case without his or her spouse, but there are disadvantages to it. For example, all household income must be disclosed & included in the means test, all community property must be taken into account in the liquidation analysis, and the non-filing spouse must sign a waiver of exemptions (ask you attorney about this).
Aside from these considerations, there is the issue you raise: What happens to the non-filing spouse's liability on joint debt? You are the one filing a bankruptcy case; your spouse is not. You are getting a discharge of debts, he/she is not. That means at the end of your case, you don't owe the debt anymore, but he/she does. However, the creditor may not attempt to collect from your spouse, because collecting from your spouse is tantamount to collecting from you. But if the marriage ends (by divorce or your death), the creditor will be free to attempt to collect from the surviving spouse.See question