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$500 Bankruptcy

$500 Bankruptcy

Have you heard the popular advertisement for $500 bankruptcy? These advertisements usually have more truth and substance behind them than $0 or $200 bankruptcy and similar ads. What are you actually getting for these $500 bankruptcy offers? The answer may surprise you.

$500 Bankruptcy May Only Be Partially Accurate

When you hear an advertisement for $500 bankruptcy, you need to look into the reality behind the offer. Many times these offers are simpy inaccurate. At best, they may only be telling you part of the information or cost.

For instance, some discount, high volume bankruptcy firms may offer a $500 discount bankruptcy. However, this price will rarely if ever cover the $335 court costs. It also may not cover hidden charges for credit reports and required classes. To make matters worse, sometimes this rate will only apply to certain limited customers. It may only apply to filers who are only on social security or minimal income. It may also not apply to those who have car loans or real estate. Essentially, it may be very likely that they are advertising a $500 bankruptcy for the most basic cases only with and abudance of many hidden charges waiting!

Be careful and examine the entire situation, reputation of the firm, and the costs required before making any appointment. Surpisingly, you may get a better price and service at a firm advertising $800 to $1200 because these prices are low but still very possble for a firm to charge with no hidden charges. A real (including the $335 court cost) $500 bankrputcy price would only give the lawfirm $165 per case for their extensive hours of legal work! This price is simply too low to be possible. The only exception would possibly be a pro-bono, non-profit charity organization (someone who would be doing the work mostly for free!).

$500 Bankruptcy May Not Be Accurate at All

Many times a $500 bankruptcy advertisement is not accurate at all. Many firms will charge this amount (or more) only for a Chapter 13 case. Chapter 13 cases always require a $310 for the court cost. However, there are likely approximately $4000 in fees total for these cases that will be paid through your bankrupty plan. This $4000 approximate amount is court-set in many U.S. districts, resulting in most places ulitmately charging about the same amount for the 3-5 year representation required for a Chapter 13 case.

Remember, most bankruptcy firms charge somewhere between $800-$2500 for a Chapter 7 plus the $335 court cost. This represents the lower and higher end of the spectrum. This simply does not align with an advertisement claiming $500 bankrutcy. You could even be signing up for a forms provider instead of an attorney. This means that you would be essentially doing your bankruptcy yourself. Alternatively, you may just be dealing with a very cheap bankruptcy office that may nickel and dime you to death with an actual, basic-case-only price of about $835 plus some hidden fees. Although there are many lower priced bankruptcy offices accross the U.S., beware of advertisements like this. Make sure to get all of the details first. Or, possibly just pursue someone else adverising a more realistic low price.

Do you need debt relief?  Call Bymaster Bankruptcy Law Offices for a FREE initial consultation.

Chapter 13 Cannot Modify Mortgages

Chapter 13 Cannot Modify Mortgages

Chapter 13 cases are very powerful at stopping foreclosure or forcing payments. Yet, Chapter 13 bankruptcy cases cannot modify mortgages. It has been proposed many times in Congress or in legal circles that Chapter 13’s should be able to alter mortgage terms. No changes to the bankruptcy code have been made for this purpose. Explaining what Chapter 13’s can and cannot do with mortgages will help clarify what is actually available in a Chapter 13 case.

What Chapter 13’s CAN Do with Mortgages

Chapter 13’s are powerful because they can always stop foreclosure and even sheriff sales. If you are filing your first Chapter 13 case, you can almost always stop your foreclosure or sheriff sale. This is almost a “given.” It is a near 100%, “bullet-proof” way of stopping the foreclosure process.

Chapter 13 also provides a built-in mechanism for curing arrears (behind amounts that you owe to the mortgage). Chapter 13 also forces the mortgage company to take ongoing payments usually through paying these amounts to the Chapter 13 trustee. This is a wonderful system because it works every time. It also is very predictable because the same thing happens every time.

What Chapter 13’s CANNOT Do with Mortgages

Chapter 13’s cannot “modify” mortgages generally in any way. This means that the terms, the monthly payment, and any amount behind are generally non-negotiable and non-alterable in Chapter 13. Because there are no provisions in the bankruptcy code (and case law) for forcefully modifying a mortgage through bankruptcy, the mortgage company generally expects everything to stay exactly the same. The mortgage company expects to receive full payment for their arrears amount and any monthly ongoing payment. This expectation is so strong and well known that it is virtually impossible for anything else to happen through a Chapter 13 plan even if the creditor is willing to agree otherwise.

Therefore, even though Chapter 13 is very powerful, sometimes getting a loan modification can be a more affordable option if it becomes available. Some mortgage holders will file a Chapter 13 case to stop a sheriff sale or foreclosure only to later negotiate a loan modification. By paying the mortgage for 6-18 months through the Chapter 13 plan, it can prove that debtor can afford loan modification payments. It may actually be in the mortgage holder and the debtor’s best interest to make a loan modification agreement. Eventually, Chapter 13 can even be dismissed in such cases. Sometimes a loan modification can be a much more stable, long-term solution than the Chapter 13 case. This is especially true if the Chapter 13 payment is excessively high due to the amount of the arrears or current monthly required mortgage payment.

Because Chapter 13’s cannot modify mortgages, many battles never occur in the Chapter 13 case. If the loans could be modified, it would be normal to expect opposition and heavy negotiation in bankruptcy. Not having to deal with these battles does have an advantage. It makes Chapter 13 very predictable and reliable. The powers of Chapter 13 are then loaded and ready to save any mortgage situation.

More on Chapter 13 Bankruptcy

Chapter 13 Plan – Getting a Raise

What if You Get a Raise During Your Chapter 13 Plan?

Chapter 13 Plan – Getting a Raise.  What will happen if you get a raise during your Chapter 13 plan?   Is it a good thing or a bad thing?  Can it cause your Chapter 13 plan payment to increase?   Receiving a raise during your Chapter 13 case can potentially alter the pay-back requirements for your Chapter 13 plan.  It is important to understand a few general things about how a raise of income relates to your Chapter 13 case.

You May Be Under Duty to Report Your Raise

You may be required to report your raise to your attorney and the Chapter 13 trustee.  Generally, if the raise is substantial such as an increase of income more than 10-15%, you should always report it to both your attorney and the Chapter 13 trustee.  Although no increase in your Chapter 13 payment may be required, you are generally under duty to report substantial changes of income to allow these changes to be reviewed by trustee.

Raises in Some Chapter 13 Cases Will Not Increase the Plan Payment

However, in some cases, a substantial raise income will also cause the trustee to motion the court for an increase in repayment to your creditors.  In such cases, your Chapter 13 plan payment must increase to meet the new repayment requirements for your new income level.

The Chapter 13 trustee, however, usually does not want to unreasonable burden the Chapter 13 case filer.  The trustee does not want to overburden the case filers to the point where finishing their Chapter 13 plan becomes less likely.   Sometimes the Trustee will not seek the maximum amount possible with the income level (such as turning the whole additional raise amount over for a payment increase).   They will many times settle on a lesser amount negotiated by your bankruptcy attorney.

For more information on filing Chapter 13 Bankruptcy, check out our Chapter 13 Bankruptcy info.  Bymaster Bankruptcy Law Offices offers FREE consultations.  Call us today at 317-769-2244.

Chapter 13 Plan - Raise in Income

Chapter 13 Average Monthly Payment

What is the average Chapter 13 monthly payment that most people face during their Chapter 13 case?   Although an average amount can be estimated, different types of cases result in different ranges for calculating an average Chapter 13 monthly payment.  The average payment for a Chapter 13 varies within these various case types.

The Overall Chapter 13 Average Payment

The average payment for a Chapter 13 case overall is probably about $500 to $600 per month.   This information, however, may not be very helpful for your particular situation.  It takes into account a large number of low payment amounts where low income debtors are paying very little back.  Then it averages out the larger payments of $1000 to $2000 or more.  These higher-payment-cases are usually due to higher income and housing repayment requirements.   Cases in the $500 to $600 range are very common and reflect debtors who are usually paying at least one automobile through the plan and possibly some other “average-type” repayment requirements.

Chapter 13 Bankruptcy Payment Due

The Low-End Chapter 13 Payment “Average”

Cases within the $200-$300 per-month range (or less) are extremely common within the Chapter 13 system.  These cases usually reflect medium to lower income debtors who need to only address some basic repayment requirements.  Also, sometimes these lower-average cases are for situations where debtors are “forced” to file Chapter 13.  In such cases, the debtor cannot file Chapter 7 because they are currently “barred” (unable to file Chapter 7 because 8 years has not yet passed from filing of a previous Chapter 7).

Paying House Payments and Arrears Cause the “Average” to Be Much Higher

If you are facing foreclosure or are behind in house payments, your Chapter 13 plan payment will be much higher.  The “average” plan payment for such cases is usually closer to $1500 per month.   Sometimes it can even be much greater.  This is simply because the normal, ongoing mortgage payment along with the arrears must be fully paid throughout the life of the plan.   In addition, the Trustee usually charges a “conduit” fee to pay the ongoing mortgage payment through the plan.   The average plan payment is always higher in such cases.

High Income Bumps Up Your Average Payment

If you have high income, your “average” monthly Chapter 13 plan payment will likely be bumped up considerably.  Depending on the range of your income, your payment could raise much higher.  High income, high debt Chapter 13 filers very frequently face payments averaging in the $2000-$3000 range or even greater.  On average, Chapter 13 will force such filers to repay a high percentage of the debt.  Many times this will rise up to the 60%, 80%, or even 100% range of repayment.   Still, these debtors will receive all the benefits of the Chapter 13 including 0% or dramatically reduced interest rates.  They will also benefit from the rigid protections that Chapter 13 always offers.

Chapter 13 Plan Payment Too High?

Is your Chapter 13 plan payment too high in your bankruptcy case?  You can sometimes have your bankruptcy trustee agree to reduce your plan payment.  Your Chapter 13 plan payment can be reduced due to variety of reasons.  If your payment is too high, such a reduction can save an otherwise impossible case.

Chapter 13 Bankruptcy Payment Too High

Reduction in Income Could Reduce your Payment

If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income.  If your income reduces, you are many times also allowed to reduce your plan payment.   This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.   Or, alternatively, if your plan is not yet confirmed, you can sometimes just have your attorney file an amended plan.  If your income has dropped considerably, you may even be able to convert your case to a Chapter 7 in some situations.

However, even if your Chapter 13 plan payment is too high, you cannot always reduce it simply due to a drop of income.  Some cases are already calculated at the absolute minimum level for achieving your Chapter 13’s goals.   For instance, if you are paying your mortgage and car payment through the Chapter 13 plan, you could very likely already be paying the minimum amount required for case.   In such cases, a drop of income would have no effect on reducing even an impossibly high Chapter 13 payment.  You would likely need to change the plan by surrendering the car or house in such a situation in order to drop the payment any further.

“Changing Your Plans” to Change Your Payment

Your plan payment can many times be reduced in Chapter 13 by “changing your plans.”  For instance, consider if you changed your plans by surrendering an over-priced, high-balanced automobile in your Chapter 13 case.   If this automobile had a balance of $35,000 in your Chapter 13 case, you could reduce your Chapter 13 payment up to even $650 per month.  Surrendering a house, a boat, a motorcycle, or other items can also sometimes have a similar effect.

Remember, however, not all cases are alike.   Every case has different requirements on repayment to creditors.  If your income is too high, you may not realize a significant reduction in your plan payment by “changing your plans.”  You may be required to pay back up to 100% of your debt in your Chapter 13 case depending on your debt and income levels.  Although you will generally always reduce your plan payment by surrendering items, a 100%-pay-back case may not receive the same dramatic discount on plan payment that other cases may realize in surrendering items.

Changes in Expenses or Circumstances

When a Chapter 13 payment is too high, a change of expenses or circumstances can also warrant a reduction in your Chapter 13 plan payment.  New expenses (if high enough) are many times valid justification for reducing your plan payment.  For instance, if a family is required to take on massive new daycare or child care costs, a reduction in the Chapter 13 plan payment may be possible.  If a family member becomes ill, this may result in new medical costs and a reduction of the Chapter 13 plan payment may be possible.

If your circumstances change, you can also sometimes reduce your Chapter 13 plan payment.  For instance, if you are encounter marital problems and become separated, you may be able to reduce your plan payment.   If more family members or dependents are added to your home, you may also be able to reduce your plan payment.

Chapter 13 Payment Too High?  Bankruptcy Lawyers Have the Know-How

Remember, always seek the advice of an experienced bankruptcy attorney if you want to reduce your Chapter 13 plan payment.  Most Chapter 13 bankruptcy attorneys have dealt with these Chapter 13 payment issues hundreds of times.  They have the experience to explain exactly what is possible in reducing your payment.

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