October 13, 2006
Can I "Cancel" a Chapter 13 Bankruptcy if I Changed My Mind?
Here is an interesting question I received this morning from one of my former clients. She raises several important points so I thought I would answer it on the blog rather than simply by email.
"My friend signed bankruptcy papers yesterday…she was in a rush. She's filing Ch. 13 with 100% payback because she makes too much money to do anything else, allegedly. Later she found some errors that is making it where what she will pay out on the debts plus regular monthly bills, she pays out more than she's bringing in. Called her lawyer at 6:30 this morning, left a message — DON'T FILE IT, IT'S NOT RIGHT. Called all day and couldn't get anyone. Messages at the lawyer's office weren't listened to until 3 PM — AFTER FILING. Is here a 3-day right of recission for this, or an amendment/revision possibility, or is this something that would be addressed at the hearing? "
My response: There is no "right of recission." once a case is filed it is filed. She can voluntarily dismiss the case but if she does so any subsequent filing within the next year would be slightly more difficult. In a second case filed within a year, the automatic stay, which is the core protection of bankruptcy, expires after 30 days unless the debtor and her lawyer file a Motion to Extend Stay and convince the Judge to extend the stay because of changed circumstances.
Further, if she is going to dismiss, she should do so soon, before any creditor files a Motion for Relief from Stay. If she was to dismiss after a creditor files a Motion for Relief from Stay, she would be barred from refiling for 180 days. She can and should sit down with her lawyer and discuss the budget tosee if it can be fixed. Budgets and plans are amended all the time.
By the way, if your friend had filed a Chapter 7, she would not have the right to voluntarily dismiss. Chapter 7 cases can only be dismissed if the Court permits. Chapter 13 cases can be dismissed as of right (unless the Court orders otherwise).
You have highlighted a couple of very important points. First, every bankruptcy debtor needs to carefully review each page of his or her petition to check for accuracy. I think it is also the responsibility of the bankruptcy lawyer to explain exactly what is going to happen and what the debtor must do, but ultimately, the debtor is the one who has to live with the Chapter 13 for the next five years.
Second, when one is sitting in a bankruptcy lawyer's office discussing Chapter 7 or Chapter 13, everything needs to be on the table. Cars, houses, time shares, furniture - everything. I have noticed a significant change in the way both the courts and the trustees approach bankruptcy.
Under the old law, bankruptcy was a kind of financial tool. Chapter 13 was sort of like Consumer Credit Counseling on steriods - you had the power of the Court in your corner to force creditors to accept a reasonable repayment plan. Now, bankruptcy is more about pain. What does it take for you to survive? Luxuries - and by luxuries I am referring to a car payment of $500 or a house payment of $2000 - may not be acceptable.
The trustees in bankruptcy now expect you to change your lifestyle and to live under a very basic budget. Bankruptcy consultations now remind me of tax problem consultations. I am not the reassuring, optimistic counselor that I used to be because I would be misleading my clients if I took that attitude. Although bankruptcy remains a very powerful tool, the issue is not what you want to do, but can we structure a plan that lets you keep your house or car or furniture.
Filed under Chapter 13 issues, General consumer bankruptcy info, Georgia Bankruptcy by Jonathan
Comments on Can I "Cancel" a Chapter 13 Bankruptcy if I Changed My Mind? »
Can I change bankruptcy attorneys after filing? The one I have retained is incompetent and has not provided good advice. I have another hearing in a couple of weeks because we were denied in our first meeting with the judge this morning.
Thanks
Jim
Yes, you have the right to terminate your current lawyer and hire a new one. Be aware, however, that in doing this you may have an issue with regard to fees. You don't say where you live but in many federal districts, bankruptcy lawyers operate under a "no look" fee contract whereby they do not have to keep hourly time. Because a new lawyer would be coming in during the middle of your case, he might not be eligible to get paid under a "no look" fee contract and would be required to keep detailed time records. Most consumer bankruptcy lawyers are not set up to keep detailed time records so your pool of potential replacement lawyers may be small. Before you terminate your existing lawyer, yo may want to sit down with him or her to discuss the issues and try to come to some agreement. Objections are common in bankruptcy cases and it may be that the problems in your case are easily fixable.
I filed a chapter 13 in Dec. 2004. my payments are $461.00 bi-weekly. I can't afford this amount anymore, can I ask my lawyer to get the amount decreased.
my husband and i are 4 months into making chpter 13 payments and can no longer afford to make our payments. We are having to decide on paying utility bills or paying for car insurance, childcare or home owners insurance. We told the attornies that we didn't see how the means tests said that we can afford $1200 a month over what we are already struggling to pay, but they kept saying "the numbers and the test don't lye". we filed in order to keep our house. What happens if we can't do it anymore? We know we could loose the house, but what kind of timeline are we looking at from the time we say "we quit" until we have to get out of our home? Our cars are also under the plan, can we keep them if we make arrangements with the car company?
My husband and I are thinking about filing for chapter 13 in Arkansas. WE bought two new cars in the last 6 months. One of the cars we bought was only worth $30,000 but we financed over 45 thousand for it. My husband spoke to an attorney and he advised us to go out and if possible buy another car that we would not be so upside down on before we file. We did this and now have three car notes. The attorney advised us that we would get to choose which cars to keep and which to turn back in at no cost to us. We planned on turning in the one we owed 45 thousand on. I can't find anywhere that talks about getting to turn a car in. I only find articles that say we have to pay all car notes in full that were purchased within two or three years of filing. Is this true?
Cassendra
my wife and i have been in our chapt 13 plan for 4 years in illinois we now have enough equity to refi @ a 30 year fha rate of 6.8 % our old mort is 7.5% and is paid out of the plan.we have submitted a good faith estimate for right to refi with proceeds of the refi pay off plan. the paralegal will not forward that is in our best interest until she gets 2 mos payroll stubs. she is being a bitch about it last year she submitted everything without stubs but we reniged because the rates were arm rates. im afraid if something goes wrong theyll make us pay more because our income is much higher than 4 years ago due to promotions.it seems like she is on the other side our payments are 1470 amonth the new mort with every thing escrowed in will only be 1330 amonth with cash out of 25,000 we only need 5,000 to pay off plan please help someone!!!
We filed for chapter 13 in early Dec and proposed plan is at 100%. Our confirmation hearing isn't until Feb 21, but my question is, my husband has enough money in a money market that we have thought about paying this bankruptcy off in the next few months. Do we have to wait until after the 6 month deadline for all claims can be filed?
If you are in a 100% plan, I don't see why anyone would object to paying it off early. However, this is a question for your bankruptcy lawyer. He/she should be able to find out if this unusual, early payoff involves any complications.
I filed Chapter 13 in September of 2007, however my payments were set for more than I can afford. My car was included in the payments, but it is currently in the shop and I haven't got the $400-500 estimate I was given to repair it. I have to get a ride to work every day and may lose my job because the person I ride with recently had their hours changed and now come in an hour later than I am supposed to be there. Also, I really have no money to live on and can barely keep my electricity and water on. I am thinking about getting my Chapter 13 dismissed due to hardship. I am wondering if my mortgage company will work with me.
My case was filed in December. My confirmation hearing is in a month. Do I still have the right to change my mind before that hearing? If so, will the money already paid go to attorney fees?
we have been in a chp 13 for a year- we owe more on our house and two cars than they are worth- my husband has lost his job and we will not be able to make the monthly payments on my pay alone. Are we able to switch from a 13 to a 7 and reaffirm on the two cars and house? what is involved in doing this-we currently live in columbus ohio and the job market is very slim and the housing market is even worse. when we contacted our attorney his only response was "get a job"- I am sure we are not the first couple to be faced with this situation.
I have been in Chapter 13 for over two years and have one year left. Many of my creditors have been paid and they have wrote my loans off as bad debt. I have not given the trustee last years tax returns and they are trying to get my case dismissed. I was thinking, maybe it would be good if they did and I could stop with my payments. Would all my creditors come after me for the original amount I owed them? Could they do anything? My credit is shot anyway, what else can they do?
I have been in Chapter 13 for over two years and have one year left. Many of my creditors have been paid and they have wrote my loans off as bad debt. I have not given the trustee last years tax returns and they are trying to get my case dismissed. I was thinking, maybe it would be good if they did and I could stop with my payments. Would all my creditors come after me for the original amount I owed them? My credit is shot anyway, Could they do anything?
My husband and I have been in a chapter 13 for nearly three years. It occurred to me after reviewing our last statement that we were never going to be finished paying out this coming August. We contacted the trustee to confirm this and were told that yes, we were going to be extended til at least April of 2009 to be completely finished with our repayment plan. This was disheartening to say the least but here's my main question. With gas prices so high, and a husband who travels 90 miles one way to work (which is the only income in our home so its the only monies available to repay the plan) our expenses for him to get to work have skyrocketed. Obviously he's not going to quit his job, but the expense of him traveling from our current home to work has doubled in the last three years. Also, we live in the country, where the shipment and transportation costs (a hand me down from gas prices) has now caused even the price of eggs to rise from .79 cents a dozen eggs to 2.99. A gallon of milk three years ago was 2.49. Now, if you are lucky enough to get it on sale, its over 3.99. These are just a few examples of how rural folk are trying to survive at a time like this. My question to you is, considering my three children have now gone from adolescents to teenagers, my fuel expense is doubled, my home owners and car insurances have been cancelled because I have to choose to feed my family of 5 rather than pay those bills on a take home salary of only 1,100 a month after they remove their chapter payments. Can we opt to file for some form of hardship? Do you have any advice since our attorney that handled our case moved with the only explanation being that he has relocated his office out of state due to the economy????? HELP