Interviewer: Have you seen people that talk to you, get a little bit of advice and then try to do it themselves? What typically happens to people that think they can fix this themselves?
James Logan: Chapter 13 is fairly complicated. To file a chapter 13 on your own is going to be quite difficult. There are a lot of deadlines that you have to meet; there are a lot of motions that you may have to file on your case that have to be done by a certain time. You’ve got to make sure the payments are being made; there are a couple of different affidavits that you may have to file at different points during the case.
A Pre-Confirmation Certificate Attests that a Person Has Made All Mortgage Payments, Trustee Payments and Filed Tax Returns
If one’s got a pre-confirmation certificate, that basically says you’ve made all your mortgage payments and trustee payments and filed all your tax returns. Well, they ask me about car cram downs, and there’s another affidavit that you have to file if you’ve done a cram down on a car and that’s got to be filed 14 days before confirmation. If you don’t get them filed, it’s a real problem. Chapter 13 is a much more difficult to pursue on your own than a chapter 7 might be.
A Lot of Chapter 13 Bankruptcies Do Not Work Out for People Because of Certain Complications
Interviewer: How often do you see that people do chapter 13, follow up on them and they can’t finish it, they miss a payment and they fall out?
James Logan: Probably more than 50 per cent in the chapter 13 don’t make it to confirmation probably because they’re complicated and probably because people are really struggling with their incomes right now. A lot of Chapter 13s do not work out.
An Individual Can File Chapter 13 Bankruptcy More Than Once in a Time Period
Interviewer: Is that with or without an attorney?
James Logan: The main reason that people fall out is that they’re just biting off more than they can chew. They want to hold on to the house but by the time you get into it and they try to make the mortgage payment and the trustee payment. Then the water heater goes up and then the car needs brakes and the kids needs braces and you’ve got to layout money for a doctor. Life comes up and even though on paper, it looks like their budget is going to work, the reality is there’s always an extra expense that throws them into behind a payment and they end up falling behind. The good news is you can file more than one chapter 13 because if something doesn’t work out, we can re-file and start fresh again with everybody.
The Judges and the Chapter 13 Trustees Want A Bankruptcy to be Successfully Discharged
Interviewer: What’s an issue with it? Is the chapter 13 a hair-trigger, if you even lay with the payment, will they fall up hard or can you miss the payment if that doesn’t work?
James Logan: It’s not on a hair-trigger. The judges and the chapter 13 trustees, they want to see the case work, especially the first time filing. They will really give you every opportunity to make the case work. They want to see you save your house, so if a payment is a couple of days late, that’s not the end of the world. Everybody, especially the first time filers, they want to see these cases work, so they’ll give you some leeway.