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Elibility to file for Chapter 7 and 13 Bankruptcy

You can file for both Chapter 7 and Chapter 13 bankruptcy, but you must meet these requirements:

(h) (1) Subject to paragraphs (2) and (3), and notwithstanding any other provision of this section, an individual may not be a debtor under this title unless such individual has, during the 180-day period preceding the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency described in section 111(a) an individual or group briefing (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis. [§109(h)(1)]

1408. Venue of cases under Title 11

Except as provided in section 1410 of this title, a case under title 11 may be commenced in the district court for the district--

(1) in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile, residence, or principal place of business, in the United States, or principal assets in the United States, of such person were located in any other district; or

(2) in which there is pending a case under title 11 concerning such person's affiliate, general partner, or partnership. [28 USC §1408]

(g) Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if—

(1) the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case; or

(2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title. [§109(g)]

Secure Debt under Chapter 13 Bankruptcy

TITLE 11.BANKRUPTCY · UNITED STATES CODE

Chapter 13. Adjustment of Debts of an Individual with Regular Income

Subchapter II. The Plan

11 USC § 1322. Contents of plan

(a) The plan shall--

(1) provide for the submission of all or such portion of future earnings or other future income of the debtor to the supervision and control of the trustee as is necessary for the execution of the plan;

(2) provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title, unless the holder of a particular claim agrees to a different treatment of such claim;

(3) if the plan classifies claims, provide the same treatment for each claim within a particular class; and

(4) notwithstanding any other provision of this section, a plan may provide for less than full payment of all amounts owed for a claim entitled to priority under section 507(a)(1)(B)only if the plan provides that all of the debtor's projected disposable income for a 5-year period beginning on the date that the first payment is due under the plan will be applied to make payments under the plan.

(b) Subject to subsections (a) and (c) of this section, the plan may--

(1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims;

(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;

(3) provide for the curing or waiving of any default;

(4) provide for payments on any unsecured claim to be made concurrently with payments on any secured claim or any other unsecured claim;

(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due;

(6) provide for the payment of all or any part of any claim allowed under section 1305 of this title;

(7) subject to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section;

(8) provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor;

(9) provide for the vesting of property of the estate, on confirmation of the plan or at a later time, in the debtor or in any other entity;

(10) provide for the payment of interest accruing after the date of the filing of the petition on unsecured claims that are nondischargeable under section 1328(a), except that such interest may be paid only to the extent that the debtor has disposable income available to pay such interest after making provision for full payment of all allowed claims; and

(11)include any other appropriate provision not inconsistent with this title.

(1) a default with respect to, or that gave rise to, a lien on the debtor’s principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law; and

(2) in a case in which the last payment on the original payment schedule for a claim secured only by a security interest in real property that is the debtor’s principal residence is due before the date on which the final payment under the plan is due, the plan may provide for the payment of the claim as modified pursuant to section 1325(a)(5)of this title.

(d)

(1) If the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is not less than--

(A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;

(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or

(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $525 [$525 (added by BAPCPA 10-17-05)] per month for each individual in excess of 4, the plan may not provide for payments over a period that is longer than 5 years.

(2) If the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is less than--

(A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;

(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or

[Dollar amounts in subsections 523(a)(2)(C)(i) and (ii)are adjusted on April 1 every 3 years by section 104. Adjusted amounts effective 4-1-04 are in brackets.]

(e) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1325(a)(5)of this title, if it is proposed in a plan to cure a default, the amount necessary to cure the default, shall be determined in accordance with the underlying agreement and applicable nonbankruptcy law.

(f) A plan may not materially alter the terms of a loan described in section 362(b)(19)and any amounts required to repay such loan shall not constitute "disposable income" under section 1325.

Bankruptcy Code Change

State leads nation in per-capita claims despite Congress' effort to cut filings

By MARA LEE
Gannett News Service

Congress voted to change the bankruptcy code to require more people to pay some of what they owe because a majority of lawmakers believed Americans were using bankruptcy as an easy way out of debt.

Two years later, figures compiled by the American Bankruptcy Institute show they were only half right, and in Tennessee, the push for reform may have had even weaker results.

Nationally, fewer people filed for personal bankruptcy last year, but the hope that creditors would get more money as a result wasn't fulfilled.

And, in Tennessee, one in every 84 households filed a bankruptcy claim — a level that kept the Volunteer State No. 1 in the nation.

What about debtors who do file in court? Are more of them being intercepted early enough in the legal process so they're able to pay a bigger percentage of their bills?

"It works exactly the opposite," said Hank Hildebrand, a Chapter 13 bankruptcy trustee, who has worked on behalf of creditors in bankruptcy cases for 25 years in Nashville.

In Chapter 13 bankruptcies, consumers enter into repayment plans instead of liquidating their debts. Under the old law, 70 percent of filings were in Chapter 7, which erases debts entirely after certain assets are forfeited.

The law was supposed to move more families with above-average incomes into Chapter 13, but most people declaring bankruptcy don't make above-average incomes. And most of those who do, find they have too little money left after expenses to pay much of what they owe.

The 500-page law is so poorly worded, full of contradictions and illogical, that judges disagree on how it should be enforced, Hildebrand added. So people in similar situations have very different outcomes.

Nate Thompson, a spokes man for ACA International, a debt collectors trade group, said: "It really hasn't produced a windfall for collectors. It hasn't produced any benefits for creditors, either."

Car financers benefit

One group has profited: the car financing companies. In the past, Chapter 13 filers had to send monthly payments based on what the car was worth at that time. That's because if the company repossessed the car, it could sell it for only that amount.

In the new law, debtors must pay the full car payment, so there's less money available for credit cards or hospital bills.

In the first half of 2007, 62 percent of bankruptcy filings were in Chapter 7. The 8 percentage-point drop since the new law took effect is because of the subprime mortgage crisis, bankruptcy observers agree.

The traditional causes of bankruptcy are job loss, divorce and lost income from illness or injury.

It was a combination of rising mortgage rates and job loss that forced Sylvester and Angela Davis to file for bankruptcy.

The Thompson Station, Tenn., couple bought a house for $143,000 11 years ago with an adjustable rate mortgage that started at about 9 percent. Their mortgage rate began increasing two years later and has gone up more than a dozen times. Their monthly payments have increased to $1,496 from $1,189.

"We were just tickled to have a house," said Sylvester Davis, who repairs copying machines. "It never even crossed our minds we were paying a high interest rate."

The Davises also have two high-interest-rate home equity loans that cost them another $900 a month.

Still, they say they were current on their payments until Angela lost her administrative job with Saturn three years ago.

"The year and a half my wife was out of work is when it snowballed," Sylvester Davis said.

When she began working again, the couple worked out a deal with their mortgage company to catch up on two months of missed payments and get out of default.

They paid thousands of dollars more than their usual payment for attorney fees, foreclosure fees, underpaid property taxes. When the end of the catch-up period arrived, the mortgage company said they were still in arrears and asked for more than $4,000 a month.

They had a fixed-rate refinancing deal set, but their mortgage company said they hadn't paid anything for months, when the Davises say they had records showing the money was deposited.

"All they wanted was more and more money," Sylvester Davis said. "We're reporting this to the attorney general."

Means test called a mess

Maria Salas is their bankruptcy attorney in Nashville. She said that, for many families, it only takes a small disruption — being unemployed for six weeks or one big medical bill — because every dollar is already spoken for.

During the bankruptcy law debate, consumer advocates railed against the means test that compares the debtor's last six months of income with the state's average. They predicted it would prevent middle-class families from getting protection from creditors.

The advocates argued that some people would not have enough money to succeed in Chapter 13's repayment plan and would be barred from liquidating their debt through Chapter 7, meaning they would be hounded by calls from creditors or have wages garnished.

Those warnings turned out to be overblown, attorneys around the country said.

But the means test is a mess, the lawyers say.

Recent News & Events

Elibility to file for Chapter 7 and 13 Bankruptcy

Secure Debt under Chapter 13 Bankruptcy

Bankruptcy Code Change

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