YOU MUST READ AND
UNDERSTAND THE BANKRUPTCY PETITION, AND NOTIFY ME OF ANY ERRORS OR
OMISSIONS, BEFORE YOU SIGN IT, AND IT IS FILED. FAILURE TO DO
SO IS AN UNCONSIONABLE BREACH OF YOUR DUTIES AS A DEBTOR.
Please read the Chapter 7 Section of my
web site (
www.mulvaneylawoffices.com) for the top 10 bankruptcy
pitfalls, debt-to-income ratio, and exemption information.
Below is information specific to Chapter 13.
1. Failure to
make or catch up plan payments. The first full payment is due 30
days after filing. A wage order issued by the Trustee to your
employer is required. Your employer sends the money to the
Trustee and the Trustee sends the money to your creditors once your
plan is confirmed. That means, if you are paid twice per month,
the wage order needs to start on your next pay check after filing in
order for you to be current. If it doesn't start then direct
payment is required. You must catch up missed payments or your
plan will be dismissed.
*****
Please create a free account at
the
*****
National Data Center in order to track your
payments.
www.ndc.org
Below
is a link and the information on how to make payments to the Chapter
13
Trustee.
http://www.seattlech13.com/info/make_pay.php
WARNING: You will get behind in
your car payment in Chapter 13 if you put the Attorney's Fees in the
plan, so you will have to catch up ASAP if your case is dismissed.
2. Failure to budget. Chapter
13 is designed to take 100% of your disposable income for 5 years.
It is very difficult to live with just what you need for necessities
for that long. Therefore, budgeting is vital to success in
Chapter 13. There are many good sources of useful information
and tools for budgeting. Below are just two to get
started:
Top 100 Most Wished For Books on Personal Finance
from
Amazon
http://www.amazon.com/gp/most-wished-for/books/2719/ref=zg_bs_tab_t_mw
A
Free Web Site That Lets You Download and Analyze Your Banking
Information
https://www.mint.com/
3.
Using credit. Do not use credit, even if a creditor sends you a
pre-approved credit card. A condition of being in Chapter 13 is
that you not use credit. You must seek and obtain a Court Order
to use credit. Obtaining the Order requires filing a Motion and
setting the Motion for Hearing.
4. Not staying current
on taxes. Your Chapter 13 plan only includes debts that existed
on the day you filed. It does not include debts which accrue
after filing. Therefore, if you under withhold and owe taxes
while you are in Chapter 13, the IRS has cause to move to dismiss
your plan. Dismissal would require refiling in order to include
the tax debt as pre-petition debt and starts the clock over for the
60-month plan. So, if your plan is dismissed in month 40 and
you refile, you will not receive your discharge until 100 months from
your original filing date.
5. Not sending Trustee tax refund
amount above $1,500. Any tax refund amount above $1,500 is
non-exempt in Chapter 13 and must be voluntarily sent to the
Trustee. Failure to do so, could result in dismissal of your
case.
6.
Not sending Trustee copy of tax return. Refusal to send the
Trustee tax returns for each and every year you are in the plan is
cause for the Trustee to move to dismiss your case. Please send
the tax returns to me first and I will submit them for you.
When you receive a letter from the Trustee directing you to do
something, send me the letter and whatever was requested by fax or
email attachment and I will submit it to the Trustee for you.
Please do not communicate with the Trustee's office directly even if
they contact you. Contact me first and I will communicate with
the Trustee's office for you. It makes representing you
difficult if I don't know what you are doing with respect to the
Trustee. Thank you.
7. Failure to report increased
income. If you are paying anything less than 100% to creditors,
if your income goes up during Chapter 13 then likely so will your
disposable income and required plan payment. If you don't
timely report a raise or increased income, then you could fall behind
on your required Plan payments which could result in dismissal of
your case.
8. Buying a car. It is possible to buy a car
while you are in Chapter 13, but strict requirements must be met
which are:
(1) A monthly payment of $400 or less
(2) A purchase
price (before trade in) of $15,000 or less
(3) Interest of 20% or
less
Below is the form that needs to be completed and
submitted to me, so that I can submit it to the Trustee for
you.
Chapter
13 CarPurchaseRequest with Limits & Fax.pdf
Below
is a link to a loan calculator you can use to enter the interest
rate, balance and repayment term in order to calculate the monthly
payment.
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx
9.
Failure to pay child support. You are required to remain current
on child support in Chapter 13. The Trustee sends letters to
the child support recipient to ensure that you remain current.
Failure to remain current could result in dismissal of your case and
refiling with the regular child support payment, plus the arrears in
the new plan and payment of the 5% Trustee's fee on the whole amount
distributed.
10. Post-petition HOA dues. If you own
a condominium or house with HOA dues and the property is being
surrendered in your bankruptcy, your personal liability to pay the
dues that accrue after filing continues until the title to the
property is out of your name. Banks sometimes take 5 years or
more to foreclose. Banks and HOA's often will not accept a Deed
in Lieu of Foreclosure (they are not required to do so). This
means that even if you have been in Chapter 13 for 4 years when the
bank finally forecloses, the HOA will sue you for the which accrued
after filing. This could result in a garnishment of 25% of your
net pay, which would trigger a Motion to Dismiss your case and refile
for another 5 year plan, putting you in Chapter 13 for 9 years.
This is an unfair result that has yet to be remedied by the
Washington State Legislature. If you are affected by this
issue, I urge you to contact your representatives in the State
Legislature and ask them to pass a law correcting this injustice.
.gif)
14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197
chris@mulvaneylawoffices.com
