Completing a Chapter 13 Plan is quite an accomplishment for anyone, and it's something to be proud of, no matter the circumstances. I recently discovered that one of my clients had not only completed her Chapter 13 Plan payments (which totaled more than $1000 per month for 60 months) but that she had never been late in making a single payment. She latest she ever made a payment was on time. Now, that takes dedication, commitment, and probably a little luck. So, what happens when you've finished making those payments?
Child support you receive is counted as income for purposes of the "means test" in both chapter 7 and chapter 13 cases. In a chapter 7 case, there is little that can be done if the inclusion of child support income causes your means test...
Like the news media, statisticians are catching up to what we all have known for months: The number of new foreclosures filed in that last 12 months have increased nationally by at least 75%. In the State of Connecticut, that number is 100% meaning that new cases have doubled and in the inner cities, that increase is 400% to 500%; four to five times the previous year. There were over 2.2 million homes placed into foreclosure in 2007 nationally. Folks, that is a lot of families out of their homes. The middle class is truly in crisis.
So what does the government propose to do about this mess? The President wants to give some people $600. Well, that might help make a mortgage payment or buy some gas, but it doesn't save a house. The State of Connecticut started a loan program, but the qualification requirements are so strict that it is limited to about 300 families in the entire state. Other programs will simply result in new loan charges and only postpone the inevitable.
If you crank up your computer this morning to the MSN homepage, you see a featured article called "facing foreclosure - 9 options" written by MSN's money writer Liz Pulliam Weston. Her 9 options include: Make a budget; consider getting help; check your refinance options; be realistic; get organized. And if a loan modification or refinance isn't possible, she says your options are limited to: sell the house; offer a deed in lieu of foreclosure; negotiate a short sale; or allow the foreclosure to proceed.
Hey Liz! What about filing a chapter 13 bankruptcy case? How can you omit the very powerful and proven successful option of saving your home by filing a chapter 13?
Pending bankruptcy legislation would allow bankruptcy judges to modify mortgages in Chapter 13 in order to slow down the foreclosure crisis in this country. Mortgage bankers oppose the bills even though it could ultimately benefit their industry.
Today, they rolled out former Republican Congressman Dick Armey in the Wall Street Journal to attack former Republican Congressman Jack Kemp's support for the proposals. Armey's attack boils down to the old saw that, gosh, if you allow people to pay back less than they owe on contracts then it might possibly become more expensive or more difficult to borrow that way for other people.
Marriage, or a former marriage, does not make one spouse personally liable for the debts incurred by the other. Yet I've had a round of clients reporting that debt collectors have told them "it's the law" that they are responsible for the debts of an ex. Not so, in California anyway.
Californians seem to be more vulnerable to this lie because our community property system is not well understood. Community property does not make both spouses individually liable for a debt. The community property law says two things: 1) the law will presume that whatever a married couple acquires during marriage is community property; and 2) the community property is liable for the debts of either spouse incurred during the marriage.
I sometimes analogize it to a marriage that, for debtor/creditor purposes, is comprised of three "persons": he, she, and the community property. The community is liable for the debts of either of the others. The separate property of he or she is liable for debts they incur, in or outside of marriage.