Interviewer: If the trustee dismissed my case, can I re-file it?
James Logan: You can definitely re-file a bankruptcy. And many times chapter 13s got dismissed because you fall behind in your payments and we could re-file a new case and start fresh with everybody, start fresh with the mortgage payments and start fresh with the plan payments, the only exception to that rule is if you’ve had two cases dismissed within a year prior to the filing of the most current case, you do not get the advantage of the automatic stay that we talked about earlier.
The Filing of a Third Case of Bankruptcy Cannot Stop a Foreclosure
So, if you have two cases that are dismissed and you try to file a third case, it may not stop a foreclosure sale of your home. So that’s another reason to talk to an attorney because a common situation is we’ll have people file cases on their own and the cases won’t work out for whatever reason and get dismissed by the court. Sometimes they’ll file two cases and they’ll come to see me and I’m like I’m sorry, there’s nothing we can do for you because the filing of the third case won’t stop the foreclosure. But you can definitely re-file a chapter 13 if it gets dismissed for whatever reason.
The Initial Documents Required in Filing a Chapter 13 Bankruptcy
Interviewer: How does one get started if they feel like they need to file right away? When they meet with you for the first time for their initial consultation, what do they need to bring with them?
James Logan: The main things we need are your most recent tax returns, your pay stubs for the last 60 days and any bank statements or bank accounts that you may have, those are the three critical items because that would give us enough idea about your financial situation and we can advise you what the best course of action is.
The Amount of Debt that an Individual has to Repay Under a Chapter 13 Bankruptcy
Interviewer: How much the debt does the individual actually have to pay?
James Logan: In chapter 13, the amount of debt that you have to pay is determined by your income, your assets and the types of debt that you have. Child support and taxes less than 3 years, you’re going to have to pay 100 per cent of what’s owed on that. Debt payments on a mortgage, you have to pay 100 per cent of what you’re behind in the mortgage if it goes above the amount of the house. Car payments, we’d go for modifying your car loan, credit cards, other debts, the amount that you have to pay in those depends on your income and depends on what assets you have. In chapter 13, there’s what they call the chapter 7 liquidation tests. It says that your creditors in a chapter 13 must get at least as much as they would in chapter 7.
The Creditors will Probably be Paid 10/15 Cents on the Dollar in a Chapter 13
So, say for example, on a chapter 13, you have $50,000 in equity in your house that we can’t protect, in the chapter 13, we’d have to pay up to $50,000 to your creditors because that’s what they would get in chapter 7 if we were to file a chapter 7. Obviously if you have $50,000 in equity that we couldn’t protect, we would never file a chapter 7 for you but that’s what you’d have to pay in chapter 13 payment plan. If you have no equity and no other assets, because many times, people don’t have any assets that we can protect in a chapter 13 but we’ll be filing the chapter 13 to stop the foreclosure. In that case, you’ll probably pay 10/15 cents on the dollar for the other debts. But more importantly, they’ll be paid after any taxes and after any back payments on your mortgage, so you’re going to be caught up on your mortgage and how your taxes are re-paid off long before you have to worry about paying any of your creditor debt.