Contemplating Dismissing Chapter 13

[mel22nv]

So I'm contemplating dismissing my Chapter 13. Currently the trustee have a little over $6K in holding funds. My mortgage arrears is a little over $6K. I want to dismiss the Chapter 13, get my mortgage arrears paid up and refile a Chapter 7. I'm retired/disabled veteran. In May 2019 the Haven Act made VA Disability exempt as is my SSDI. When I filed in 2017 I had no choice but to file Chapter 13. I feel like if I can pay my mortgage arrears (VA Home Loan, not trying to lose). Long story short when I first looked into filing BK my first attorney said to stop paying the mortgage (at the time I was working and he said that was the only way to get me in a chapter 7) Some 8 months later when my health got worse and I stopped working he tells me oh your VA disability is considered income. Fast forward I get in a Chapter 13 this was before my SSDI was even applied for or approved so needless to say things were tight. Several modifications to the plan and terminating my first lawyer and I now pay $2745 each month for basically 3 more years. I have a 2013 vehicle that while I have no issues its got 80K miles on it and I'm wondering what will it look like in 3 years.

So with my discharge being late 2022 my 2020 plan of action is to dismiss Chapter 13 now I'm not in a 100% payback. Only secure creditors which is Mortgage, Mortgage arrears, car payment, IRS (around $15K total but I'm told some meet the 3 yr threshold rule meaning it could fall off), everyone else that filed a claim I was told would get basically what they would had I filed a Chapter 7 (I'm no lawyer just what I was told).

So my question is this if I dismiss the Chapter 13, catch up mortgage arrears and get in payment plan with IRS (I know they cannot be discharged in Chapter 7) how long should I wait to file for the Chapter 7? I'm only concerned with my mortgage, IRS and (will hopefully trade in 2013 auto for 2016/17 used)

Asking what you think of my plan? If its something that's doable? Most think I've been crazy to struggle the past 26 months making these high payments. I'm just trying to find a way out of 3 more years of hoping nothing major happens. Oh and hindsight I've made a lot of $ mistakes. Never knew I could have dismissed and paid mortgage arrears before (otherwise would have done it when I got my SSDI backpay)

I seem to learn everything the hard way and I'm not starting my 2020 out with this thing just hanging waiting for the HVAC or something else to happen, I have to have a plan and right now dismissing the Chapter 13 and refiling a Chapter 7 some 6 to 8 months down the road seem feasible. justbroke I know you're in FL as well and most say the Haven Act is too new but I just think the law was signed into law to help folks like me if I have to be the case study then so be it. I want my life back.

Sorry so long let me know what you all think des, @LadyinRed, justbroke or any of the other stars of this forum! Thanks in advance and Happy 2020!

[justbroke]

So my question is this if I dismiss the Chapter 13, catch up mortgage arrears and get in payment plan with IRS (I know they cannot be discharged in Chapter 7) how long should I wait to file for the Chapter 7? I'm only concerned with my mortgage, IRS and (will hopefully trade in 2013 auto for 2016/17 used)

I can't say how long to wait, but you may be able to file quickly. It will depend on whether there are any Motions for Relief From Stay (RFS) are pending. (Courts do that so you can't get an RFS, then refile to stop the inevitable.) Usually your order dismissing the case will include some language on whether you're restricted and for what time period. Six (6) months is usually the period that the court blocks new filings when there's an RFS. Given your circumstances, there may no restrictions on refiling.

Asking what you think of my plan? If its something that's doable? Most think I've been crazy to struggle the past 26 months making these high payments. I'm just trying to find a way out of 3 more years of hoping nothing major happens. Oh and hindsight I've made a lot of $ mistakes. Never knew I could have dismissed and paid mortgage arrears before (otherwise would have done it when I got my SSDI backpay)

A plan is better than no plan. As for your specific plan, I think I like it. That would certainly cure the arrears and get you back on track. Then you just have to deal with an IRS OPA (Online Payment Agreement) and keep creditors at bay until you can file the new Chapter 7.

I seem to learn everything the hard way and I'm not starting my 2020 out with this thing just hanging waiting for the HVAC or something else to happen, I have to have a plan and right now dismissing the Chapter 13 and refiling a Chapter 7 some 6 to 8 months down the road seem feasible. justbroke I know you're in FL as well and most say the Haven Act is too new but I just think the law was signed into law to help folks like me if I have to be the case study then so be it. I want my life back.

We all learn the hard way. I don't think it's "too" new only that we haven't had any caselaw with the United States Trustee (UST) poking at it! I think the law is pretty clear but that doesn't stop some ambitious UST attorney to try to make caselaw.

I would be cautious with depending on the balance on hand with the Trustee. They could spend it at any moment without notice.

Sorry so long let me know what you all think des, @LadyinRed, justbroke or any of the other stars of this forum! Thanks in advance and Happy 2020!

Here's to 2020.

[mel22nv]

justbroke Thanks for responding I know the funds the trustees holding are not guaranteed to be that amount, I just made my Dec payment but I really think I maybe able to get the mortgage arrears paid, Here's to 2020; guess time will tell me when to go for it!

[despritfreya]

mel22nv I saw a reference to wanting my "input". I will attempt to review this evening but I will assume JB has covered the issues.

Des.

[mel22nv]

Thanks despritfreya if you have anything to add but yes JB covered the issues. I guess there's no sure way to find out until I pay mortgage arrears and dismiss Chapter 13. Looking forward to hopefully a fresh start in 2020!

[despritfreya]

. . . So with my discharge being late 2022 my 2020 plan of action is to dismiss Chapter 13 now I'm not in a 100% payback. Only secure creditors which is Mortgage, Mortgage arrears, car payment, IRS (around $15K total but I'm told some meet the 3 yr threshold rule meaning it could fall off), everyone else that filed a claim I was told would get basically what they would had I filed a Chapter 7. . .

My question is this if I dismiss the Chapter 13, catch up mortgage arrears and get in payment plan with IRS. . . how long should I wait to file for the Chapter 7? I'm only concerned with my mortgage, IRS and (will hopefully trade in 2013 auto for 2016/17 used)

Right now dismissing the Chapter 13 and refiling a Chapter 7 some 6 to 8 months down the road seem feasible

Ok, so here is my take on this.

1. Now that you “qualify” for a Chapter 7 dismissing case #1 and filing case #2 is feasible and may be your best course of action especially if you are struggling with the Plan payments. So long as you “qualify” I see no impediment to moving forward without waiting the 6 or 8 months you mention. I am sure that many folks who were/are on VA disability are thinking about taking the same approach now that they “qualify” for the Chapter 7. In general, I see nothing wrong with dismissing case #1 to utilize a new law under case #2.

2. Having said the above, there are several things you need to understand/consider.

A. I assume you are operating under a Confirmed Chapter 13 Plan. If my assumption is correct, there is a Court Order directing the Trustee to distribute the money he/she is holding. If you dismiss I am not sure you will get any of the money back. If your Plan has not been Confirmed you should get most of it back shortly after the case is dismissed. You need to find out how things are handled in your District.

B. If the funds do not go back to you, you need to find out if any of the money will be used to cure the mortgage arrears. If you dismiss the Chapter 13 and then file a Chapter 7 you need to figure out how you will bring the mortgage arrears current.

C. Since you have not been making the car payments you will need to decide if you want to keep the car once the Chapter 13 is dismissed. If the answer is “yes” then you need to work with the lender to cure the default. If the answer is “no”, then no big deal as the debt will be discharged in the Chapter 7.

D. The three year rule on your taxes will not apply since the three years stopped running on the day your filed Chapter 13 and will resume running on the day your Chapter 13 is dismissed. There are some additional waiting periods but, at the moment, the information is not in my head. As you suggest, the taxes will not be discharged. However, once you have a discharge you can work with the taxing agencies to get on an installment plan.

E. Although JB mentions the 180 day rule for re-filing, that rule is probably not an issue for you unless a Motion for Relief From Stay had been filed in the Chapter 13. What is an issue is. . . If you file case #2 within 1 year of the dismissal of case #1 you need to make sure you file a Motion to get the protection of the automatic stay extended past 30 days. Now, quite frankly, the loss of the automatic stay, if you fail to get it extended, is not a big deal since, within about 4 months (so long as there are no problems) the stay is replaced by the Discharge.

All-in-all, with the change in the law, if your circumstances are such that a Chapter 7 will work, then it could make sense. I think your next course of action is to discuss the specifics of your case with an attorney. If you have lost confidence in your current one, go someplace else to discuss your options.

Hope this helps a bit.

Des.

[mel22nv]

Thanks for responding Des, I'm in FL Middle Dist BK Court. I am under a confirmed plan, I don't plan on filing to dismiss until I know I have mortgage arrears funds on hand. As for my car its being paid via the plan as well I paid too much so its not something I plan on keeping. I was awarded SSDI this year and also became VA exempt from property taxes so my taxes went way down from $2800 to $298 a year. My mortgage company show monthly escrow will go down by $167 to only $89 per month to include annual homeowners insurance. I'm not sure if I'll keep my current attorney he's my second and like the first he said he could get me in a Chap 7 too and when I mentioned the new law his office never moved on finding out more so I might as well pay the $ to another attorney willing to do this conversion. My goal is to pay mort arrears and keep my home, payment plan with IRS and let 2013 vehicle go and buy something after the Chap 7 so keep paying until discharge.

In hindsight I probably should of done this sooner but they (current law office/paralegal) just kept saying give up the house (built in 2015, VA Home Loan) and I refuse to lose my benefit!

I do know my Trustee don't pay every month so this month will be larger payment so it should help. I want to make sure I have mortgage arrears and two months mortgage before I dismiss.

I will only dismiss then which with my high payments should be doable Jan or Feb.

I know my military retirement is taxable so because of SSDI backpay I may owe taxes which may cause the 180 day wait which is fine; I make enough to pay everything secure until I can refile; I'm nervous but determine! Thanks again for responding! Happy 2020!