How Will My Bankruptcy Effect My Mom? Or, How Not To Get Your Chapter 13 Bankruptcy Plan Confirmed.

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How Will My Bankruptcy Effect My Mom? Or, How Not To Get Your Chapter 13 Bankruptcy Plan Confirmed.

I recently stumbled across a South Carolina case, as described by a fellow blogger. In short, the chapter 13 bankruptcy plan was rejected by the trustee, because it included two pretty good sized mortgage payments as required expenses.

The problem? One was a primary mortgage on a second separate home, in which a family member resided.

This case demonstrated that bankruptcy coupled with an unreasonable chapter 13 plan can also bring a family together. Literally (for those not following, the second home was lost leaving the entire family under one roof).

For those interested, here are the details:

"In 2005, the debtors bought two virtually identical townhouses nearby each other. The debtors lived in one and the mother lived in the other.

The debtors and the mother both had unoccupied bedrooms. The townhouses had identical first mortgages, but the debtors' townhouse also had a $100,000 second mortgage.

In 2009, as part of their exemption planning, the debtors switched townhouses with the mother in order to maximize their homestead exemption. By that time, the debtors had also amassed over $152,000 of credit card debt. Their chapter 13 plan proposed to repay 7.5% of that amount. The plan also proposed to pay in full the amount owed on the debtors' 2009 Dodge Journey at $437 a month.

The bankruptcy court held that a $1,600 monthly mortgage payment to maintain a separate residence for the husband-debtor's 72 year-old mother was an unreasonable and unnecessary expense in the debtors' Chapter 13 Plan."

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Christopher Ariano, Ariano and Reppucci PLLC | Attorney Advertising

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