Michigan debtors who are considering filing for Chapter 13 bankruptcy may be interested in a ruling made by a Georgia bankruptcy court. The decision marks the second time within a month that a bankruptcy court permitted a Chapter 13 debtor to include in her payment plan the payments for redeemed real property that had been sold in a tax sale.
The debtor possessed a property that was to be sold in a tax sale. The highest bidder, a limited liability company, obtained possession of the title. However, the debtor had a period of redemption during which she had the right to retake possession of the title.
Before the redemption period expired, the debtor filed for Chapter 13 bankruptcy. This type of bankruptcy allows individuals who have a steady stream of income to seek relief from debt while maintaining ownership of their property. The debtors are required to submit a three-to-five-year payment plan that applies future income to part of all of their debt.
The debtor included in her payment plan the full redemption amount of the property that was sold in the tax sale. The limited liability company objected on the basis that it possessed the title to the property while the debtor merely had the right of redemption. The company asserted that the full redemption amount should be paid in its entirety before the end of the year-long redemption period. The judge acknowledged the differences in opinions regarding the issue at the district and national levels, but approved the bankruptcy payment plan.
An attorney who practices bankruptcy law may assist clients with determining whether they may be eligible for Chapter 13 bankruptcy and which of their debts may be included. The attorney may advocate on behalf of bankruptcy clients whose creditors may challenge their payment plan or payment amounts.