In a Chapter 13, Lisle bankruptcy attorney states that paying the trustee is half of the battle. The other half of the battle is what you do with the money that you actually take home from your paycheck. Do you actually pay your current first and/or second mortgage company out of what is left or do you miss appropriate those funds because you want to spend money in other ways? That is the difficulty of Chapter 13. It really takes discipline. Not only do you have to make that trustee payment, but you have to make your current post-petition mortgage payment going forward. Many debtors have to make significant changes to their budget, to their lifestyle in order to make this work. If you are someone who is falling behind on all of your bills and you fell behind on your mortgage and you fell into foreclosure and you really haven’t made any significant changes to your budget or to your income or through expenses, how do you expect to have any success in a Chapter 13 bankruptcy case? Your bankruptcy lawyer in Chicago can only provide the advice. He cannot make the payments for the client.
The most successful Chapter 13 bankruptcy cases I have ever done are those cases where someone has lost income and now they have the income back. More likely than not, they lost income because they lost their job. Sometimes people lose income based on illness or injury and then they get back to work and then they can get back on good income. In those situations, I think the odds are better than not that the debtor will have a good chance of reorganizing their debt, repaying the mortgage arrearage, stopping the mortgage foreclosure and getting to stay in their house. Those are the best cases to accept my bankruptcy advice.
If that is not the case then there was no significant change in income, then there has to be a significant change in budget or there has to be new employment or additional income now going forward since the case was filed. Sometimes people file Chapter 13 just to stave off a foreclosure sale and buy a little bit more time in the house or a little bit more time to try and work out a loan modification with their loan company. These cases can work under some circumstances but in reality, if there is not money there, it’s not going to work in the long haul.
Chapter 13 bankruptcy cases last from 3 to 5 years which is a very long time to make regular timely payments any time during that 3 to 5 year. If a debtor falls behind on his trustee payments, the trustee has the right to bring a Trustee’s Motion to Dismiss. Typically, if a debtor falls behind 2 to 3 months on Chapter 13 plan payments, the debtor will receive a bankruptcy Chapter 13 Motion to Dismiss. That motion will be filed by the Chapter 13 trustee and set out on notice before the bankruptcy court to be in front of a certain judge on a particular date and time.