Duration of Chapter 13

Chapter 13 bankruptcies have a minimum commitment period of three years and a maximum of five years. This means that the repayment plan in a Chapter 13 will last somewhere between three and five years. A number of considerations determine this.

The first consideration is whether a debtor is below or above the median income. The median income is the median income for the household size of the debtor in the state the debtor lives in. If the debtor is below the median income, the debtor can elect a three-year plan. If the debtor is above the median income, then the debtor must have a five-year plan.

If the debtor is below the median income, the debtor may choose to enter a repayment plan that lasts longer than three years. For example, if the debtor is filing a Chapter 13 in order to pay mortgage arrears and stop a foreclosure, then debtor may elect to file a five-year plan. The debtor may choose this to keep the payment in the Chapter 13 more affordable. All mortgage arrears must be paid back in full over the course of the plan. Stretching the plan over 5 years would allow for a lower payment in some circumstances. The debtor could also elect to have the plan duration be any number of months between 36 (three years) or 60 (five years).

 

By Kris Whelchel


“But my child looks OK if you just meet him/her once”

Recently I have had a few hearings in which the Claimants suffered traumatic brain injuries (TBI) as young adults (19-25 years old).  In all three instances my clients’ had very supportive parents that provided structured, controlled living situations.  They were all allowed to participate in simple activities such as going to church, doing their own laundry, and riding with friends/relatives to medical appointments or sporting events.  They were not, however, capable of handling more stressful situations such as using public transportation on their own, going on job interviews or working, or being left alone at home for periods of time longer than their parents’ standard work day.

In all instances, the parents had the same worry about the Social Security Disability Administrative Hearing.  Since their children are able to handle conversations with people for short periods of time about superficial topics is the Administrative Law Judge going to see the “whole picture” of what the day-to-day limitations for the Claimant are?

The best answer to this question is, “It depends.”  TBI cases are most commonly analyzed under Listing 12.02.  To satisfy the “A” criteria of the listing one of the following must be met:

A. Demonstration of a loss of specific cognitive abilities or affective changes and the medically documented persistence of at least one of the following:

1. Disorientation to time and place; or

2. Memory impairment, either short-term (inability to learn new information), intermediate, or long-term (inability to remember information that was known sometime in the past); or

3. Perceptual or thinking disturbances (e.g., hallucinations, delusions); or

4. Change in personality; or

5. Disturbance in mood; or

6. Emotional lability (e.g., explosive temper outbursts, sudden crying, etc.) and impairment in impulse control; or

7. Loss of measured intellectual ability of at least 15 I.Q. points from premorbid levels or overall impairment index clearly within the severely impaired range on neuropsychological testing, e.g., Luria-Nebraska, Halstead-Reitan, etc;

To demonstrate the loss of cognitive abilities a person needs to treat with a psychiatrist on a regular and consistent basis after the traumatic incident.  The most important part of the treatment is to obtain the actual diagnosis of TBI.  The second most important is to have a support system established that can find specific instances of the above (1-6) changes and communicate them to the psychologist at every appointment.  The loss of I.Q can only be determined if there was a valid baseline score established by prior I.Q. test, which in most instances is rare.

Once a pattern of the loss of cognitive abilities is established and verified by a psychiatrist, the “B” criteria of the listing can be established.  To satisfy the “B” criteria two of the following must be considered “marked:”

B. Resulting in at least two of the following:

1. Marked restriction of activities of daily living; or

2. Marked difficulties in maintaining social functioning; or

3. Marked difficulties in maintaining concentration, persistence, or pace; or

4. Repeated episodes of decompensation, each of extended duration;

If the TBI occurred more than 2 years prior to the application date, the following “C” criteria of the listing are usually considered:

C. Medically documented history of a chronic organic mental disorder of at least 2 years’ duration that has caused more than a minimal limitation of ability to do basic work activities, with symptoms or signs currently attenuated by medication or psychosocial support, and one of the following:

1. Repeated episodes of decompensation, each of extended duration; or

2. A residual disease process that has resulted in such marginal adjustment that even a minimal increase in mental demands or change in the environment would be predicted to cause the individual to decompensate; or

3. Current history of 1 or more years’ inability to function outside a highly supportive living arrangement, with an indication of continued need for such an arrangement.

A representation of these issues laid out in the mental health treatment records is necessary to establish validity.  For example, if the Claimant cannot be left alone, argues with people for no apparent reason, and/or has problems with memory of important issues (names of parents/family, etc), the support system needs to track these behaviors and communicate them with the psychiatrist at every appointment.

Fortunately for my Clients and their families discussed at the beginning of this article, their treating mental health professionals kept diligent notes and discussed, in great detail, the difficulty that their patient’s had on a day-to-day basis.  The Medical record provided the ALJ with adequate information to get that “whole picture” of the client and not depend on a 15 minute conversation at the hearing.  They were all successful in obtaining benefits.

This article is not meant to be used as a complete analysis of how to argue a TBI before an Administrative Law Judge as TBI’s can have multiple symptoms which can effect more than one body system and can also be accompanied by other psychological diagnoses such as PTSD, anxiety, and depression.  Those diagnoses are analyzed with different listings (12.04 and 12.06) which a psychologist also can address.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What is a Bankruptcy Means Test?

A bankruptcy means test is a tool that is used to determine whether or not you are eligible for Chapter 7 bankruptcy. Prior to 2005, the means test was non-existent and it was much easier to be found eligible for bankruptcy. In order to reduce the leniency of the program, the Bankruptcy Protection Act of 2005 was passed and therefore the means test came into play.

There are two parts to the means test. The first part of the test looks at your average income for the last 6 months prior to filing bankruptcy. This average is then compared to the median family income of the state you apply in. If it is found that you meet the median family income or fall short of it, you will be found eligible for Chapter 7. In this type of test, your average monthly income isn’t solely based off of what you make at work (wage, overtime, tips, etc.); it also looks at all aspects in your life that contribute to how much money you receive in a month (child support, alimony, workers’ compensation, rental income, etc.) However, there are a few things that are not included in calculating your monthly income; some of those are: Supplemental Security Income, Social Security retirement benefits, or tax refunds.

You will need to look into the second half of the test if it is found that your average income exceeds that of the median family income of the state you’re filing in. This part of the test will look at necessary expenses (rent/mortgage payment, groceries, etc.) and subtract that from your income. If the remaining amount of income won’t cover your unsecured debt you will be found eligible to file bankruptcy under Chapter 7. If not, you will need to file for bankruptcy under Chapter 13 where a payment plan will be created for you to pay off your debts (priority, secured, and some unsecured debts). There are, however, rare circumstances that will allow you to still file under Chapter 7 even if you fail the means test. These circumstances are attributed by “special circumstances” such as a serious medical condition or becoming unemployed within recent months. Every case will vary, though, and if no special circumstances are found than you will need to file under Chapter 13.

https://bankruptcy.findlaw.com/chapter-7/the-bankruptcy-means-test.html

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can Wage Garnishments be Stopped when Filing for Bankruptcy?

If you haven’t yet filed for bankruptcy, but are in debt to some creditors, it is possible that they can have the court order that your wages be garnished if they provide evidence you are not paying them. This simply means that your payments to the creditor are directly pulled from your paychecks before you actually get the money. However, filing under Chapter 7 or Chapter 13 bankruptcy should stop your wages from being garnished by creditor debts. This only applies to dischargeable debts, though; your non-dischargeable debts such as student loans can still be pulled from your paychecks if you’re late on payments.

Filing for bankruptcy puts what is called an “automatic stay” on any dischargeable debt you owe creditors. This means that creditors are no longer allowed to collect money from you, which ultimately means they are no longer able to go through with garnishing your wages. The “automatic stay” only stops your wage garnishments during the process of filing for bankruptcy, what happens to wage garnishments after your bankruptcy all depends on which type of bankruptcy you file under.

Under Chapter 7 bankruptcy, your nonexempt property is sold to help pay off whatever debt is owed to creditors. Any debt that you have remaining will be discharged. Because this type of bankruptcy wipes out any dischargeable debt, it will permanently stop creditors from garnishing your wages because you will no longer owe them money.

Chapter 13 bankruptcy has a much different plan for dealing with debts than Chapter 7. When filing for this type of bankruptcy, you won’t need to sell any of your property (exempt or nonexempt); instead, you will create a type of affordable payment plan to pay off your debts. With this type of bankruptcy you will include the debt causing the wage garnishments in to your payment plan.

Just remember that wage garnishments can only be stopped for dischargeable debt, they cannot be stopped for any non-dischargeable debt such as child support, alimony, or student loans.

https://www.alllaw.com/articles/bankruptcy/using-chapter-7-wage-garnishment.htm

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What to Do: Bankruptcy or Debt Consolidation?

When facing issues with debts, there are a couple of ways to go about fixing it, two of which being more popular: bankruptcy and debt consolidation. Much like other decisions made in life, each one has its own benefits and consequences. However, filing bankruptcy is usually the better route to take when deciding between the two.

Unlike bankruptcy, debt consolidation does not completely discharge your debts. Instead, your credit counselor will need to try and negotiate with creditors to create affordable interest rates for you, lowered monthly payments, or help you obtain a larger loan to pay off credit debts. This is problematic because it does not wipe out your debts, but practically creates more being as you may need to take out a loan. Another pitfall of debt consolidation is the fact that not all creditors will want to make a deal with a credit counselor; nor do they have to be dealt with all at once. If your credit counselor so chooses, they can deal with your creditors one at a time which will both prolong the process and make you susceptible to problems with your other creditors who have yet to be dealt with. One more thing to keep in mind about debt consolidation is that credit counselors usually only help out with unsecured debts (credit cards, medical bills, etc.), not secured debts (mortgages, vehicle loans, etc.). Bankruptcy, however, does deal with both.

As you may have guessed after reading the previous paragraph, filing bankruptcy is most likely the best option to go with. If you were to file under Chapter 7, a large portion of unsecured debts will be discharged and unlike debt consolidation, all creditors must oblige by it. They cannot choose whether to be a part of the discharged debts or not. If you were to go the route of Chapter 13, you will set up an affordable payment plan with creditors to pay off debts with the additional benefit of protecting your secured assets from being repossessed (unlike in debt consolidation). One final thing to keep in mind is that debt consolidation has a tendency to cost more than bankruptcy, as well as have fewer benefits. Although every person’s situation is different and their solutions to debt may vary, filing bankruptcy should be considered before going through with debt consolidation.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Consumer Bankruptcies Down in First Half of 2011

The number of Americans who filed for bankruptcy in January through June of this year decreased from the same period in 2010. According to data from the National Bankruptcy Research Center, 709,303 consumer bankruptcies have been filed in 2011. During the first six months of 2010, 770,117 consumer bankruptcies were filed. The 2011 numbers represent an 8% decrease from the number of filings in the first half of 2010.

Bankruptcy filings in June 2011 decreased 5% from the number of filings in June 2010.  However, the bankruptcy filings in June represent a 4% increase from May filings. The director of the American Bankruptcy Institute has said that the recent decrease in bankruptcy filings indicates that consumers are attempting to lower their debt.

In Minnesota, 10,376 consumer bankruptcies were filed in the first six months of 2011. This represents a 10% decrease from the 11,532 filings in the first half of 2010. June bankruptcy filings in Minnesota were down from May filings, and also down from the number of filings in June 2010 and June 2009.

 

Source:

Kara McGuire, Bankruptcies Decline in 2011,

https://www.startribune.com/lifestyle/blogs/125007464.html (accessed July 5, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Princess Diana’s Dresses Will Be Auctioned To Cover Bankruptcy Debt

Fourteen well-known dresses worn by the late Princess Diana will be auctioned off in Toronto. The proceeds from the sale will be used to settle bankruptcy debts. Maureen Rorech Dunkel, a Florida entrepreneur, bought the dresses in 1997 when Diana sold them to raise money for charity. Princess Diana died in a car accident just two months after the original sale.

Dunkel belived the dresses were a good investment when she purchased them. She put the dresses on display in many different countries and formed the People’s Princess Charitable Foundation. However, Dunkel went bankrupt in 2010 and decided to sell the dresses to cover her debts. The fourteen dresses are worth more than she owes.

One of the most famous dresses in the collection is a black dress Diana wore to a White House dinner in 1985, where she danced with John Travolta. That dress is expected to raise between $800,000 and $1 million. Bidders from the United States, Canada, China, Germany, and Britain have all shown interest in the dress.

Source:

Ellen Tumposky, 14 Dresses: Princess Diana’s Iconic Gowns Go Under the Hammer, https://abcnews.go.com/US/princess-dianas-dresses-hammer-toronto/story?id=13904367 (accessed June 23, 2011).

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Debtors in Chapter 13 Bankruptcy now allowed more affordable monthly payments

A recent Supreme Court decision should allow for debtors in future bankruptcy cases to have more affordable payments. The Supreme Court in Hamilton v. Lanning has made a decision which should allow debtors to propose Chapter 13 payment plans which take the debtors’ actual income and expenses into account.

Prior to this decision, debtors’ Chapter 13 payments were calculated based on the “means test.” The means test essentially takes the six month period before debtors filed bankruptcy and uses the income earned during that period to determine what debtors should be able to afford to pay their creditors through their Chapter 13 plan. This number frequently does not reflect the debtors’ actual income or expenses. Often debtors finds that they can not afford to file a Chapter 13 case.

With this decision the number determined by the means test is now merely a starting point. Debtors may now more easily propose a plan that will take their current and future situation into consideration. This decision will give more discretion to the court to approve plans where the plan payments deviate for the means test calculation, but conform with the debtors actual current financial situation.

This change should allow more individuals to qualify to file a Chapter 13 and should increase the likelihood that those individuals will be able to successfully complete their plans.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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