TULSA OKLAHOMA BANKRUPTCY ATTORNEY » Chapter 13

SCOTUS To Decide If Chapter 13 Debtor Is Entitled To Vehicle Ownership Expense Deduction For A Vehicle Owned Free And Clear Of Liens

Dan Nunley — Wed, 21 Apr 2010 10:00:05 +0000

The United States Supreme Court (SCOTUS) has granted certiorari to decide whether, in calculating the “projected disposable income” that an above-median- income Chapter 13 debtor must devote to the payment of unsecured creditors, in order for the court to confirm, over an unsecured creditor’s objection, a plan that provides for less than 100% dividend on unsecured claims, a bankruptcy court may allow an ownership cost deduction for a vehicle even if the debtor is not actually making payments on the vehicle.

In the case below (In re Ransom, 577 F.3d 1026 (C.A.9 2009)), the Ninth Circuit Court of Appeals held that such a debtor was not entitled to a vehicle ownership expense deduction for a vehicle that he owned free and clear of liens. A Chapter 13 debtor’s “disposable income” is defined as “current monthly income received by the debtor … less amounts reasonably necessary to be expended … for the maintenance and support of the debtor…. ” For above-median income debtors, the “amounts reasonably necessary to be expended” is to be determined “in accordance with” the means test set forth in 11 U.S.C.A. 707(b)(2).

Under the “means test,” a debtor’s monthly expenses “shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides…. ” The IRS’s Local Standards include allowable transportation expenses, which are broken down into two categories: (1) operating costs and public transportation costs, and (2) “ownership costs.” At issue in the case at bar was whether the ownership cost deduction is “applicable” under 707(b)(2)(A)(ii)(I), and therefore allowed, to a debtor who owns his vehicle free and clear and thus does not have any loan or lease payments on his vehicle.

The statutory language, plainly read, does not allow a debtor to deduct an “ownership cost” (as distinct from an “operating cost”) that the debtor does not have, the Ninth Circuit determined. An “ownership cost” is not an “expense”-either actual or applicable-if it does not exist, period, the Court of Appeals reasoned, adding that it would be ironic to diminish payments to unsecured creditors in this context on the basis of a fictitious expense not incurred by a debtor. The ordinary, common meaning of “applicable” further supported the court’s conclusion. “Given the ordinary sense of the term ‘applicable,’ how is the vehicle ownership expense allowance capable of being applied to the debtor if he does not make any lease or loan payments on the vehicle?” the Court of Appeals asked.

There is “a significant split in authority” on this issue, the Ninth Circuit acknowledged. Some courts have allowed the deduction of an “ownership cost” for a vehicle that is subject to neither secured debt nor a lease, while other courts have not. Most recently, the Fifth and Seventh Circuits have joined the camp allowing the deduction, which put the Ninth Circuit “in the uncomfortable position” of disagreeing with them, the Court of Appeals noted.

In his petition for a writ of certiorari, the debtor argued that the plain language of the statute, as determined by the Fifth, Seventh, and Eighth Circuits, should prevail, and that a debtor should be allowed a deduction for the ownership costs of a vehicle regardless of whether the debtor is still making loan or lease payments. The petition criticized the Ninth Circuit for introducing an extrinsic standard, namely, the procedures of the IRS Manual, to determine the proper treatment of deductions under the Bankruptcy Code.

A decision is expected next term. When the Supreme Court releases its decision, I’ll post an update.

Chapter 13 Debt Limits Increase April 1, 2010

Dan Nunley — Wed, 31 Mar 2010 17:00:29 +0000

To be eligible to file Chapter 13 bankruptcy, a person can have only so much debt. This is because §109(e) of the Bankruptcy Code sets a ceiling on the amount of debt, both secured and unsecured, that a person filing Chapter 13 bankruptcy can have. In contrast, there are no debt limits in Chapter 7 bankruptcy.

Adjustments to the Chapter 13 debt limits are required by §104(a) of the Bankruptcy Code and are scheduled to occur every three years on the first day of April.

When these debt limits were originally enacted in 1994, they were set at $750,000 for secured debt and $250,000 for unsecured debt. The first adjustment occurred on April 1, 1998.

Since April 1, 2007, the Chapter 13 debt limits have been set at $1,010,650 in secured debt, and $336,900 in unsecured debt.

The new debt limits effective April 1, 2010 will be $1,081,400 for secured debt and $360,475 for unsecured debt. This change represents about a 7% increase in the allowed debt limits.

Lastly, to count towards these limits, debt must be liquidated and non-contingent.

A liquidated debt has a fixed or easily calculable amount as compared to an unliquidated debt where liability exists but the exact amount of that liability is unknown.

A non-contingent debt is owed whereas a contingent debt may or may not be owed depending on some other event happening which is necessary to fix the liability.

How does filing bankruptcy stop the foreclosure of my home in Oklahoma?

Dan Nunley — Wed, 13 Jan 2010 11:00:46 +0000

The Automatic Stay & Foreclosure:

Generally immediately upon the filing of a Chapter 7 or Chapter 13 bankruptcy case, an “automatic stay” goes into place.

The automatic stay prohibits a creditor, such as a mortgage company, from taking any action against the person filing the bankruptcy. Therefore, the automatic stay immediately halts a foreclosure proceeding. In order to continue with the foreclosure, the lender must get permission from the bankruptcy court.

The automatic stay is effective to stop a foreclosure in Oklahoma up until the hearing confirming the sale occurs. After that point, it’s too late to save the property being foreclosed.

Chapter 7 Bankruptcy & Foreclosure:

If a Chapter 7 bankruptcy is filed, the automatic stay will stop the foreclosure but generally only for a brief period of time. Chapter 7 bankruptcy itself provides no means to catch up on the delinquent mortgage payments. Therefore, unless the homeowner can come up with a lump sum payment to bring the mortgage current, including not only missed mortgage payments but also costs of the foreclosure action, the lender will ask for and receive permission from the bankruptcy court to continue with the foreclosure proceeding.

Chapter 13 Bankruptcy & Foreclosure:

If a homeowner wants to save his home from foreclosure but cannot come up with the necessary lump sum payment to bring the mortgage current, a Chapter 13 bankruptcy can solve the problem.

In Chapter 13 bankruptcy, a homeowner who is behind on his mortgage payments is allowed a 3 to 5 year period in which to catch up the amount he is behind.

For example, if you are 6 months behind on your mortgage payments and each payment is $1000.00, you have a $6000.00 “arrearage.” The lender’s position will generally be that it wants the $6000.00 paid in a lump sum plus late fees, and if a lawsuit has been filed the lender will tack on court costs and attorneys’ fees. Understandably, you may not have that type of money to pay in a lump sum in order to stop the foreclosure of your home.

A Chapter 13 bankruptcy filing will immediately stop a foreclosure and allow you to pay the arrearages over 36 to 60 months in a repayment plan administered through the bankruptcy court.

If you are facing home foreclosure in Oklahoma and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or just pick up the phone and give me a call at 918-615-8260. I’ll answer all of your questions in plain English so that you’ll have the information you need to make the decisions that will help you the most.

Which type of bankruptcy should I file – Chapter 7 or Chapter 13?

Dan Nunley — Mon, 09 Nov 2009 10:00:30 +0000

This BAPCPA Man cartoon is posted by the Oklahoma Bankruptcy Lawyer Blog with the express permission of the creators of BAPCPA Man:

For more information on the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, read these previous blogs posts that I’ve written:

If you’re considering filing bankruptcy but aren’t sure which type of bankruptcy would be best for your specific situation, contact me today to schedule a FREE initial telephone consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or just give me a call at 918-615-8260. I’ll answer all of your questions in plain English so that you can make a wise decision regarding which type of bankruptcy would be the most help to you.

Some Good Reasons To File Chapter 13 Bankruptcy

Dan Nunley — Wed, 07 Oct 2009 10:00:30 +0000

When it comes to filing bankruptcy, the vast majority of people file either Chapter 7 or Chapter 13 – two very different types of bankruptcy with little in common.

And when the choice is made, most people choose to file Chapter 7 instead of Chapter 13.

Why is that? Well, there are many reasons that people don’t file and even intentionally avoid Chapter 13 bankruptcy. A few of these reasons are:

Chapter 13 is more expensive than Chapter 7.
Chapter 13 takes a lot longer to complete than Chapter 7.
Chapter 13 requires repayment of at least some unsecured debt unlike Chapter 7 which generally totally wipes out most unsecured debt.

Having said that, there are situations where Chapter 13 bankruptcy is a much better option than Chapter 7 bankruptcy.

And what’s more, some people who need to file bankruptcy don’t even have the option of filing Chapter 7 – they must file Chapter 13 or not file at all.

Here are some good reasons to file for Chapter 13:

You cannot file for Chapter 7. You won’t be allowed to file for Chapter 7 if you cannot meet some new requirements imposed by the new bankruptcy laws passed in 2005. Under these new laws, you cannot file for Chapter 7 if both of the following are true:

Your current monthly income over the six months prior to your filing date is more than the median income for a household of your size in your state.
Your disposable income, after subtracting certain expenses and monthly payments for debts you would have to repay in Chapter 13, exceeds certain limits set by law. These calculations are commonly referred to as the “Means Test” — if you have the means to repay a certain amount of your debt through a Chapter 13 repayment plan, you flunk the test and are ineligible for Chapter 7 bankruptcy.

The Means Test can get fairly complex and to make matter worse, Congress has its own definitions of “disposable income,” “current monthly income,” “expenses,” and other important terms, which sometimes operate to make your income seem higher than it actually is.

In addition, if you have received a Chapter 7 bankruptcy discharge within the last eight years or a Chapter 13 discharge within the last six years, you are not eligible for another Chapter 7 discharge.

You are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.

You have a tax obligation, student loan, or other debt that cannot be discharged in Chapter 7. You can include these debts in your Chapter 13 plan and pay them off over time.

You have a sincere desire to repay your debts, but you need the protection of the bankruptcy court to do so. This might be the case if creditors are coming after you, or if you simply require the formal structure and deadlines the Chapter 13 process provides in order to follow through on your good intentions.

You have nonexempt property that you want to keep. When you file for Chapter 7 bankruptcy, you get to keep only exempt property — property that is protected from creditors under state or federal law. You have to give your nonexempt property to the Chapter 7 trustee, who can sell it and distribute the proceeds to your creditors.

In Chapter 13, you don’t have to give up any property. Instead, you repay your debts out of your income. So, if you have nonexempt property that you can’t bear to part with, Chapter 13 might be the better choice.

You have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your co-debtor will still be on the hook — and your creditor will undoubtedly go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.

If you are struggling with too much debt and aren’t sure whether Chapter 7 or Chapter 13 would be better for your specific situation, I’d be happy to talk with you and give you some good legal advice. Just fill out the Contact Dan form on the right side of this page, click on the Submit button, and I’ll get back with you as soon as I can. Or just pick up the phone and give me a call at 918-615-8260. I look forward to hearing from you.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Dan Nunley — Tue, 16 Jun 2009 12:45:22 +0000

There are many differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is much less expensive than Chapter 13. Chapter 7 is much shorter in duration than Chapter 13. But most importantly, these two different types of bankruptcy were designed to deal with different types of debt problems.

Chapter 7 bankruptcy allows a person to wipe out debt and obtain a fresh start in just a few months. Chapter 7 bankruptcy will wipe out unsecured debts such as credit cards, medical bills and payday loans.

Chapter 7 will also allow you to surrender a home or vehicle or other financed purchase and walk away without owing another penny. The entire Chapter 7 process usually takes about 4 months from the time you file until the end of your case.

Chapter 13 bankruptcy is a repayment plan that lasts from 3 to 5 years. Chapter 13 is a form of debt consolidation where you pay back secured debts, usually in full, and pay cents on the dollar on your unsecured debts. Your bankruptcy lawyer creates a Chapter 13 plan which requires you to make a monthly payment to the Chapter 13 Trustee who then pays your different creditors.

A great benefit of Chapter 13 is that it will stop the foreclosure of your home or the repossession of your car and allow you to cure any delinquency and catch up your payments over the length of the Chapter 13 plan.

If you’re struggling with debt problems and would like to know more about the different types of bankruptcy and which would be best for your specific situation, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

Oklahoma Homeowners Beware of Foreclosure Prevention Companies

Dan Nunley — Tue, 14 Apr 2009 10:00:29 +0000

There are many con artists looking to take advantage of Oklahoma homeowners who are facing home foreclosure. Therefore, you should be extremely cautious when dealing with anyone who claims to be able to prevent the foreclosure of your home.

Here are a few simple precautions that can help you avoid becoming a victim of a foreclosure prevention scam:

See what your mortgage company thinks about the situation.
Get the advice of an independent lawyer before you sign any contracts.
Don’t sign any documents that you don’t fully understand.

Here is a video that offers some good advice:

Chapter 13 bankruptcy can save your home from foreclosure. If you are facing home foreclosure in Oklahoma and would like to know more about how Chapter 13 bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

Chapter 13 Bankruptcy Can Stop Home Foreclosure in Oklahoma

Dan Nunley — Fri, 06 Mar 2009 06:00:27 +0000

Many people file Chapter 13 bankruptcy in order to stop foreclosure on their home. In order to save a home from forecIosure, the Chapter 13 bankruptcy must be filed with the bankruptcy court before the Sheriff’s sale of the home takes place.

In most cases, an automatic stay takes effect immediately upon the filing of the Chapter 13 bankruptcy. The automatic stay is a powerful friend of the person filing bankruptcy. The automatic stay will stop the foreclosure action and all other collection activity. With the automatic stay in place, the debtor’s lawyer can propose a Chapter 13 repayment plan to catch up on all past due mortgage payments over a 36 to 60 month time period.

The homeowner must make all future mortgage payments as they come due during the Chapter 13 bankruptcy repayment plan. If the homeowner misses another mortgage payment during his Chapter 13 bankruptcy, the bankruptcy judge could lift the automatic stay and allow the mortgage company to resume foreclosure proceedings.

However, if the homeowner makes all mortgage payments and Chapter 13 plan payments in a timely manner, the homeowner will be current on his mortgage at the end of the Chapter 13 plan.

If you are facing home foreclosure in Oklahoma and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

What is Chapter 13 bankruptcy in Oklahoma?

Dan Nunley — Mon, 02 Mar 2009 06:00:45 +0000

A chapter 13 bankruptcy is a powerful debt repayment plan that allows people with regular income to propose a plan to catch up on past due balances and repay all or part of their debts.

Chapter 13 bankruptcy can solve serious debt problems that a Chapter 7 bankruptcy doesn’t help with. For example, Chapter 13 bankruptcy is a great solution for:

stopping home foreclosures
preventing vehicle repossessions
alimony and child support arrearages
past due student loans
back taxes

A typical Chapter 13 bankruptcy repayment plan is 36 to 60 months long. During that time, you make a monthly payment to the Chapter 13 trustee who then divides that payment among your creditors according to the court-approved repayment plan.

The Chapter 13 plan payment is based on what you can afford to pay each month not on what your creditors want you to pay.

The Chapter 13 plan prioritizes your debts with your secured creditors getting paid first. Any remaining money is paid to your unsecured creditors in a pecking order established by the Bankruptcy Code.

And during the life of the Chapter 13 repayment plan, your creditors generally must stop all collection activity against you including phone calls, letters, law suits, wage garnishments and income tax refund intercepts.

If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.

Chapter 13 Bankruptcy and Student Loans in Oklahoma

Dan Nunley — Mon, 23 Feb 2009 16:37:35 +0000

In “Student Loans and Bankruptcy in Oklahoma” I discussed how the current bankruptcy laws require you to prove “undue hardship” in order to discharge or wipe-out your student loan. If you are unable to prove undue hardship, filing Chapter 13 bankruptcy may still be helpful to you.

One benefit to you is that in a Chapter 13 bankruptcy which is a repayment plan, you pay what you can afford to pay on your unsecured debts including your student loan, not what your loan company says you have to pay.

Another benefit to you is that while you are in the Chapter 13 repayment plan, the student loan creditor must stop all collection activity including telephone calls, letters, lawsuits, wage garnishments, and tax refund intercepts.

The Chapter 13 repayment plan will last from 3 to 5 years. At the end of that time, if you have not paid your student loan in full, you will still owe the remaining balance. However, you simply go back to making your monthly payments directly to the student loan company. This will likely be much easier for you since you will not have remaining balances on most other unsecured debts such as credit cards and medical bills which are wiped-out completely in the Order of Discharge you will receive at the end of the Chapter 13 plan.

If you are struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.