Bankruptcy, Needing a Car, and Reporting Income From Mineral Rights

July 27, 2010 - PRLog -- When people file a bankruptcy case under Chapter 13, they have the ability to pay for a vehicle through their Chapter 13 Plan of reorganization. This is beneficial in allowing the monthly payment on that car to be reduced by extending the time it will take to pay the car off. A Chapter 13 Bankruptcy also allows people to reclaim their vehicle that was recently repossessed within 10 days of the repossession. However, this can turn into a money pit.

When a car is repossessed, individuals seek Chapter 13 relief to get the car back. Even after the car is picked up, there is a 10 day period that allows the reclamation of the vehicle due to the automatic stay provisions in the bankruptcy code. Others may opt to pay their vehicle they own through their bankruptcy plan voluntarily in order to reduce the monthly pay back amount. The monthly payment is reduced by extending the term that the car will be paid on from the original contract to the length of time you are in your bankruptcy case.

Although in both instances, the initial result is gratifying, it can also become a pitfall. Cars, as most of us know, depreciate in value rapidly and the cost to maintain the vehicle compared to its value, is literally not worth the time, effort, and put into them.

This is only aggravated when paying for a car through a bankruptcy case, because when a car breaks down or is totaled, the process to get it fixed or to give it back can be a hassle on top of the necessity to get a new vehicle.

Therefore, when contemplating a bankruptcy for the sole purpose of keeping a car, you want to look at the importance of that particular vehicle to you. It is cautioned that if you do try to reorganize the debt owed on a car through a bankruptcy, the car should be fairly new, with low mileage, and reliable.

Do I need to report income for mineral rights payments? Yes, income from monthly mineral right payments must be documented if substantial payments are received. If a contract to allow gas drilling companies drill under your land is signed after filing of Chapter 13 case, then you must report the income by contacting your Attorney to amend income and budget schedules. This issue of additional income from mineral rights will arise at §341 meetings, Confirmation hearings, TRCC hearings, Motion to Incur Debt, Plan Modifications and if the trustee filed “feasibility” objection in Chapter 13 Bankruptcy case. Understanding that in some situations that the Debtor may not receive consistent monthly amount but an average would be entered on budget based on payments received.

Chapter 7 Bankruptcy cases should not be affected by the mineral right payment unless they began receiving the payments prior to filing of Chapter 7 case. It is the responsibility of the Chapter 13 Debtor to provide this information to Attorney anytime updated budget information is requested. You do not need permission from Trustee or courts to sign this agreement however it is additional income to your household just as part-time job income would be considered.

For more information visit http://www.bankrupcy-alternative.com or call us directly. Here is another bankruptcy article http://www.prlog.org/10817950-bankruptcy-divorce-and-exte... and here is another http://www.prlog.org/10817940-bankruptcy-question-should-... for your reading enjoyment.

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