Chapter 13

There are many reasons to consider filing a chapter 13 case. Some people have to because they fail the means test and are not eligible to file chapter 7. Today the most common reason is to stop a foreclosure and utilize the plan to cure the arrearage over time. Chapter 13 can also be utilized to avoid a wholly unsecured second mortgage on the primary residence of a debtor. To do this you must be able to prove that the fair market value of the property is less than the amount due on the first mortgage.

Chapter 13 can also be utilized to pay off priority tax claims over the term of the plan without the accrual of further interest. Certain marital obligations such as property settlement obligations may be dischargeable under chapter 13 and not under chapter 7. Chapter 13 may be utilized to protect assets which would not be exempt under chapter 7 so long as the plan pays to creditors at least as much as they would receive if those assets were liquidated under chapter 7.

A chapter 13 plan must be at least 36 months long. If the debtor is above the median income the plan must be 60 months long. To be confirmable all of the debtors disposable income must be committed to the plan. In an above median case this amount is determined by the means test form. In a below median case it is determined by schedules I and J.

Before filing a chapter 13 case the attorney should do some arithmetic to determine if it is feasible. I try to determine the total amount that must be paid under the plan for it to be confirmable. This would include: the amount of any arrearage claims on secured debts, any priority claims, any attorneys fees to be paid under the plan, and an additional 10% to cover the chapter 13 trustees fees. If the debtor cannot pay the total of these items divided by sixty the plan will probably not work.

In New Hampshire there is a standing chapter 13 trustee who administers all such cases. His name is Larry Sumski and his offices are located at 1000 Elm Street in Manchester.