Chapter 13 Bankruptcy Case Example; Mortgage Arrears - Secured Creditors
Posted on Aug 28, 2017 4:35pm PDT
Debt relief laws can sometimes be incredibly complicated. If you’re
facing mortgage arrears or other secured debt payments you cannot catch
up on, or an overwhelming amounts of general unsecured debt but do not
qualify for Chapter 7 protection, there are a few things you should know
before filing for
chapter 13 bankruptcy. First and foremost, a chapter 13 bankruptcy is also called a wage earner’s
plan. It allows people with regular income to develop a plan to repay
all or a portion of their debts, including most importantly arrearages
owed to a debtor’s mortgage lenders and other secured creditors.
By way of example, in one memorable chapter 13 case, a client of The Law
Office Marc G. Alster, the general manager of an upscale retail furniture
store, filed a five-year chapter 13 plan, which gave him five years to
catch up on the past due arrears he owed to his home mortgage lender.
Under the terms of his chapter 13 plan, our client was obligated to pay
a certain amount every month for five years. However, like many debtors
this debtor was often late on his chapter 13 plan payments to the chapter
13 Trustee as well as his regular post-petition regular monthly mortgage
payments to his mortgage lender.
The client defaulted on his payment obligations to his mortgagee and the
chapter 13 Trustee an alarming number of times, he showed up for maybe
one out of every three or four appointments with me over the five years
his plan was in effect and when he did show up he was almost always at
least a half an hour late. During the pendency above referred to debtor’s
bankruptcy case, The Law Office of Marc G. Alster successfully applied
for secured a new modified mortgage for him. After being approved for
modification, which substantially lowered his interest rate; this client
then defaulted on his trial period payment obligations to his mortgage
lender prior to the recording of the new modified mortgage (all in violation
of his chapter 13 payment obligations).
Despite the within referred to client’s behavior, the client still
received his chapter 13 discharge at the end of his five year plan and
all of his significant general unsecured debt were discharged without
his creditors are receiving a single dollar. The above referred to case
summary demonstrates the overall generosity and leniency of the U.S. Bankruptcy
Court in New Jersey, though I would not suggest the any debtor recklessly
fail to make their required payment obligations pursuant to their chapter 13 plan.
After he was discharged, Mr. Alster was able to procure a second mortgage
modification approval for this client, even with his very spotty record.
The second modification approved included a $107,000 forgiveness of part
of his arrearages. The forgiveness was no doubt the result of his home
being more than $200,000 underwater.
The skilled founding attorney of The Law Office of Marc G. Alster has been
representing debtors and creditors in the United States Bankruptcy Court
for the District of New Jersey and the Southern and Eastern Districts
of New York for more than 23 years. For more information about this case,
or to discuss your situation with an experienced Bergen County bankruptcy
attorney,
contact him at (201) 878-4630 or fill out the online form to schedule a free initial
consultation.