Understanding Bankruptcy, 4/19/18

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Question: Chapter 13 Bankruptcy Court – what goes on with court motions?

Close to one quarter of the motions made on Chapter 13 day are motions made by the Chapter 13 trustee to dismiss an ongoing, confirmed case. These motions are made because the debtor has not made required monthly or lump-sum payments to the trustee, or the case has become infeasible, or the debtor has not fulfilled some other requirement.

These motions are often adjourned to give the debtor some time to comply with their requirement, or withdrawn if the debtor has already complied, or the case is dismissed.

About one-tenth of the motions made are motions by the debtor (or sometimes the trustee) to modify the terms of the confirmed Chapter 13 plan due to a change of circumstances. This can be from a significant change of the debtor’s income, to the need for more time to sell property.

Other Motions often heard on Chapter 13 Court include:

Motion for Relief from the Automatic Stay: This is when a creditor has not been paid as required (often the debtor has gotten behind on the mortgage payments or property taxes due after the bankruptcy was filed). The motion to lift the automatic stay is needed for the creditor to begin or continue with a foreclosure or repossession of property. Sometimes this motion is coupled with a motion for adequate protection.

Motion to Compel: This can be to force the debtor to turn over a tax refund, or file their tax return, or otherwise fulfill a requirement.

Motion to Sell Property: In order to sell real property or significant personal property, the debtor must get a motion to approve the sale granted by the bankruptcy court.

Motion for Willful Violation of the Automatic Stay: If a creditor attempts to collect a debt from the debtor in violation of the automatic stay, they can be found liable for damages to the debtor, including legal fees.

Motion to Incur Non-emergency Debt: If a debtor needs to incur debt for a car, for example.

Motion to Avoid Judgment Liens: If a debtor’s equity in their home is less than the exemption they are allowed, they can remove judgment liens against their residence when this motion gets granted.

Next Week’s Question: High-income bankruptcy debtor? Be prepared for a five-year Chapter 13 plan!

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