Expert: Terry Leeders - 5/28/2007

Question
Hi Terry.  We filed ch13 May 2006 & it was confirmed on September 2006.  We are on a 5 year plan.  Trustee gets 2.6% & unsecured creditors get 13%.  Our last payment was in March (and that was 2 payments behind).  Our plan includes the house, 2nd mortgage, 1 car & the credit card debt.  When we first met with our attorney, he said the payment would be approx. $2900 & we could handle that.  After it was confirmed, we found out that the payment was $4301.

Anyway, I recently lost my job and was out of work for almost two months.  We decided to sell our house to try to get out of the ch13 due to the payments being too high ($4301.00).  Our level of stress has been higher than what it was prior to filing ch13.  At the time of filing, we were told our home was only worth maybe $265K.  We had no equity.  The Trustee gave us permission to sell our home (via email).  We just signed a contract to sell our home for $299K and are closing on June 14th.  Throughout this whole ch13 process, our attorney has been pretty much useless and I need your advice.

If we have enough to pay the Trustee his 2.6%, the unsecured creditors their 13% and the mortgage company their full mortgage balance, will we be able to get the ch13 case discharged?  

We are now relocating to South Carolina after the closing and are worried about being able to rent.  A mortgage broker here in SC told me that if we had a discharge, that he could provide a mortgage the following day.  Our attorney can't seem to give us any honest answers. Please help.  

Answer
THanks for writing. The short answer is yes.  You can bring a motion in court to allow you to sell the home and use the proceeds to pay down the bankruptcy, which would end your case.  Normally you need to do this when you have a buyer.  You may need to seek other counsel to assist you as there could be some local rules and caselaw that may affect the outcome.  But in IL where I practice, this is fairly common.  Best of luck.