“I don’t need to keep paying my mortgage after filing chapter 13 bankruptcy.”
This is not always correct. Depending on your local rules the mortgage payment may or may not be included in your monthly plan payment. In most cases it is only the arrears that are included in your plan payment and not the regular monthly payment. If the regular monthly mortgage payment is NOT included in your plan payment then your regular mortgage payment is due the month following filing bankruptcy. Many people think just because I file a chapter 13 bankruptcy I do not need to continue to make monthly payments on the mortgage. Once you file the bankruptcy the “automatic stay” is in place to stop foreclosure but if ongoing regular monthly payments are not made then the bank/servicer can file a “motion for relief of automatic stay” and continue through the courts to foreclose due to nonpayment.
There are alternatives prior to foreclosure or after filing bankruptcy to help keep your home. One of those options is applying for a loan modification. Applying for a loan modification prior to foreclosure may stop foreclosure all together. If you have filed a chapter 13 to stop foreclosure, in most cases the bank is still willing to accept a loan modification post filing.
“I can keep my tax refund after filing chapter 13 bankruptcy.”
This is not always correct as well. The bankruptcy trustee sees this as disposable income and should be given to pay down your creditors, therefore requiring you to hand it over. Disposable income are any funds not needed to support your living expenses and make your plan payment. Since you already listed your income and expenses with the schedules of your bankruptcy, any other income is considered surplus and should be paid to your creditors.
There are two possible ways to avoid having to turn over your tax refund but they both definitely come with fine print and strings attached. The first option is to include language in the bankruptcy that you’re excused from turning over your refund. This is a very risky proposition and would need a great deal of explanation to the courts and trustee. It would be the argument of needing the tax refund to provide for your living expenses and the court could determine the chapter 13 is not feasible all together.
The other option would be to submit a stipulation. This would require you to submit documentation on unforeseen expenses like car repairs, home repairs, medical expenses. The reasons cannot be to take a family vacation, buy new ski equipment, or build a new pool because they are not necessary items. Once the documentation is submitted it is left up to the trustee if you decide to keep the return. Contact a real estate attorney if you’re going through a bankruptcy in Texas.
