Article written by Columbia, SC bankruptcy attorney Daniel Stone
Below is the outline of the topics we covered in the seminar on September 5, 2013. The topic of the seminar was – “Why should a debtor choose to file a Chapter 13 instead of a Chapter 7”
1. Mortgage arrearages
2. Car note or car arrearages
3. Mobile home. Remember we talked about that to get the full benefit in a Chapter 13, the mobile home loan must be separate from the land. This allows the debtor to “cram down” the value of the mobile home into the plan. I also spoke about concerns I have such as insurance and feasibility.
4. 910 day Rule car valuations. This rule applies to valuing cars in Chapter 13 plans. The loan must be at least 910 days old. We also spoke about the business exception. Spoke about how to value and use NADA retail.
5. Personal assets – valuations. Items such as furniture can be valued. Loan must be at least a year old.
6. IRS Tax Liens. If liens are certain age and meet other requirements, the lien can be stripped to the equity of property on Schedule A & B. Please note the exemptions do not apply.
7. IRS Priority debts spread out over 5 years
8. Second and Third mortgages can be valued in certain situations. We also spoke about good faith valuations. In re Faust.
9. The presumed interest rate is 5.25%. We spoke about which debts the interest rate is applicable to.
10. Student loans. Spoke about the Bruner case and 4th Circuit cases. Also spoke about the limited benefits of a Chapter 13 for student loans if a debtor has a wage order.
11. DSO/PROPERTY SETTLEMENT Obligations. Spoke about how Chapter 13 is the only path for Debtors if they wish to try to discharge property settlement debts in bankruptcy.
12. Assets. Chapter 13 maybe the only path for some debtors who have assets above state exemptions
13. High income debtors. Some high income debtors may not qualify for a Chapter 7
14. 100% Chapter 13 Plans. We spoke about some benefits and defenses for debtors who have to pay back 100% of their unsecured debts to include statute of limitation defenses.
15. Flexibility. Chapter 13 is easier to get into and out of than a Chapter 7.
16. The plan that “keeps on giving”. We didn’t touch on this topic. But Max Gardner in North Carolina runs a bankruptcy boot camp and tells his clients that every Chapter 13 bankruptcy has the potential to lead to additional legal fees and awards for you and your clients. I agree. To a limited extent, this has been true for some of my clients.
17. Stopping wage garnishments. Although SC does not allow wage garnishments for consumer debts, wage garnishments still occur for taxes, child support, student loans, and in some cases medical debts. Chapter 13 bankruptcy stops the wage garnishment immediately