Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a reorganizational type of bankruptcy. It allows an individual or a family with steady income to repay a portion of their debts over a period of time, based upon their income and expenses. This repayment plan will, in most cases, be at 0% interest. This type of bankruptcy is very helpful for those that have non-exempt assets or are trying to catch up on delinquent mortgage payments. Within certain guidelines, you will be able to keep all of your real and personal property. A Chapter 13 bankruptcy will usually allow for the following:

  1. Immediately stop the foreclosure of your home
  2. Catch up late or missed mortgage payments
  3. Immediately stop automobile repossessions
  4. Catch up missed or late automobile payments
  5. Restructure automobile loans
  6. Immediately stop wage garnishments
  7. Wipe out some I.R.S. debts, and pay others without ongoing interest and penalties
  8. Repay other debts at a fraction of the balance owed

The filing of a Chapter 13 may also allow you to eliminate a second mortgage on your home if the value of your house is less than what you owe to the first mortgage holder. Additionally, we may also be able to modify your mortgage through Bankruptcy Court Mediation. If the filing of a Chapter 13 bankruptcy is deemed to be appropriate in your situation, you and I will develop a plan to be filed with the Court telling the creditors how much they will receive. This plan will be developed based upon your budget and the property you are keeping. In many cases, the bankruptcy Court will approve a plan that provides for payments that are only a percentage of your total unsecured debts and that are payable over a period of time, up to five years. A Chapter 13 bankruptcy may also allow you to re-structure your car loans so that you pay only what the car is currently worth, not the entire balance claimed by the creditor.