Most jurisdictional areas allow unexpired leases which you’d like to retain the merchandise to be paid by you ‘Outside of the Plan’ directly as an allowed expense and included in your Schedule ‘J’ of Expenses. If the remaining terms of your lease have fewer months remaining than the life of your proposed Chapter 13 Plan, the Plan payment amount would likely increase by, and when, the lease expires.
If you need to replace or retain the merchandise being leased upon its expiration, the most common scenario is to have your attorney file a Motion to Approve Credit a few months prior to the expiration of the subject lease. If you: have managed to maintain the lease payments satisfactorily out of your budget during the pendency of the Chapter 13 Plan; can show you have the ability to afford the credit you’re requesting in your motion; have a need to replace the property which was the subject to the lease which is about to expire, it’s likely the court will approve your Motion for Credit. Once you have the courts permission to use credit as outlined in your Motion for Approval of Credit, you can then begin the process of replacing the leased merchandise which is about to expire. Learn more about bankruptcy at http://bnkut.com and http://infospeak.org/?p=95
If the terms of the lease are delinquent at the time the Bankruptcy Petition is filed, the Plan must address that delinquency. Either the unexpired lease maybe completely provided for in the Plan including the curing of any delinquency…. or the delinquent amount may be provided for separately and ‘specially’ while you pay the on-going payments as a part of their Schedule ‘J’ of Expenses according to https://erinjgz.wordpress.com/2015/10/11/learning-about-bankruptcy-in-2015/
Rent-to-Own contracts are by definition a rental agreement with an option to purchase the merchandise at some time during the agreement. Depending on what the Rent-to-Own contract states regarding the option to buy, you may have a legal interest in the property being rented. As such, the contract to rent can often be construed as a purchase contract. Should you desire to purchase the merchandise, the Chapter 13 Plan may be able to propose you to declare that intention by asserting your purchase rights and treat the Rent-to-Own contract as a purchase contract and pay them in the Chapter 13 Plan as a secured creditor.
LOANS SECURED BY RETIREMENT FUNDS
In Chapter 7, retirement loans are simply viewed as ‘secured’ obligations and the debtor must pay them after filing Chapter 7 in order to avoid the loan being off-set by the retirement funds pledged as collateral.
Loans secured by retirement funds need special consideration in a Chapter 13 case. They are ‘secured’, but they’re loans to the debtor themselves. When the petitioner pays a ‘secured retirement loan’, they’re actually paying or re-paying themselves. From the general unsecured creditors’ perspective the debt owed to them should be paid in full before the debtor repays themselves on a retirement loan. On the other hand, if it’s not paid back, the debtor not only loses the retirement funds pledged as collateral, they’ll have serious tax consequences as well.
Trustees and the courts have a mixed view of how to address these Retirement Loans. Most allow the Chapter 13 debtor to continue to pay retirement loans directly outside of the Chapter 13 Plan as an allowed budgetary expense. If, however, the retirement loan is scheduled to be paid-in-full prior to the conclusion of the Chapter 13 Plans completion, the Chapter 13 Plans monthly payment amount would likely increase by the amount of the monthly retirement loan payment following the month it was paid off.
In this manner, the debtor is paying into the Chapter 13 Plan all available funds after consideration of necessary living expenses and after meeting the payment terms of a loan secured by the debtors retirement account while avoiding tax consequences that could derail the ability to use Chapter 13 constructively.
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the Chapter 13 Bankruptcy Plan
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