Expert: Norma Duenas - California Bankruptcy Attorney - 1/6/2010

Question
We claimed Chapter 13 in October 2008. We live in Michigan and they take our tax returns.  Our house is falling apart, we have had plumbing issues and had to spend money that was intended to pay our summer and winter taxes on our house.Our septic system is failing and the city requires that we hook up to the city line. Cost to do that is approx.$15,000. Our tax returns are always over $10,000. We originally owed less than $20,000 when we filed, however, we also had to forclose on a home that we owed approx. $85,000 on. We make bi-weekly payments to the court as well as surrendering our tax returns each year. When our three year plan is over we will have paid close to double what we originally owed if you do not count the foreclosed home that the bank now owns and will resell. My question is, does our plan end when the $20,000 is paid back or do they keep taking as much money as they can get until the three year period is up and is there any way to file something to keep our tax returns to cover our home repairs so that we can pay our taxes on our house. Are we going to lose our house if we cannot pay our taxes on our house until the three years is up on our bankruptcy plan? We can't even run our washing machine or flush our toilet paper,I have never had to live like this and I cannot believe that my children have to live like this. I know we have to pay for our mistakes but this is ridiculous. This is our second bankruptcy. Our last bankruptcy was 10 years ago,you would think we would have learned our lesson. With the new laws we are depressed,bitter and angry.My husband has even mentioned suicide.This is really teaching us nothing but desperation.Money,or lack there of, is all we can think about and every last dime is spent before my husband's check is deposited in the bank.Can you help me?

Thank you for your time,

Megg  

Answer
Chapter 13 bankruptcy plans unfortunately do not account for unexpected expenses and emergencies that will generally arise in the majority of cases. Your best option is to consider filing for a modification or suspension of plan payments in your Chapter 13 plan since generally trustees will not allow you to keep your tax refunds. Modifying your plan payment may give you the needed money to cover your increase in expenses. If you have an attorney you should consult with him to determine if it is feasible in your case to file for a possible modification of plan payments in your Chapter 13 case. As to your question on when your plan ends, this will depend on what is proposed in the plan. Your Chapter 13 petition would have specified the amount that was owed and this may have included any deficiency on the home that was foreclosed on. The Chapter 13 plan will specify what percentage of what you owe will be paid back during the term of the plan. If you have paid back 100% of what you owed then your plan can end sooner.

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