Chapter 13 Bankruptcy
If you are facing overwhelming debt and cannot pay, it is crucial that you contact a bankruptcy attorney. With the help of a qualified bankruptcy lawyer, it can be determined what the best course of action for you is. Many debtors who cannot qualify for Chapter 7 but need financial assistance can breathe easier by restructuring their debt and reducing monthly expenses enough to get them back on their feet.
Chapter 13 bankruptcy, also called the wage earner's plan, is designed to help individuals that earn a regular income but who continue to have difficulty repaying debts and covering monthly expenses.
Under Chapter 13, a debtor typically keeps all of his or her property. If you are facing foreclosure, filing under Bankruptcy 13 would stop foreclosure proceedings, and have the opportunity to cure delinquent mortgage payments over the time of the Chapter 13 Bankruptcy plan. Nevertheless, Chapter 13 Bankruptcy debtors must still make all mortgage payments in full that come due during the Chapter 13 plan period on time as they come due. In order to qualify for a chapter 13 you must be able to afford to pay your secured debtors. Secured debts are debts secured by assets like a car loan or a home mortgage. Please speak with an attorney at The Law Offices of Luke Jackson to determine whether filing a Chapter 7 or a Chapter 13 bankruptcy will be more beneficial to you.
Debtors who file for Chapter 13 will devise a repayment plan most favorable to their particular circumstances. It is crucial to contact a bankruptcy attorney to assist you through this process. After the plan is submitted for court approval, repayment begins about 30 days after the case is filed and the debtor is generally allowed between 3 to 5 years in which to repay unsecured creditors. If the plan is approved, creditors are governed by the plan and the court oversees the entire process to ensure that debtor and creditor adhere to its terms. During this time creditors will be forbidden from starting or continuing collection efforts. After the end of the 3 to 5 year payment plan, a discharge is given for any unsecured debts remaining unpaid.
Benefits of Chapter 13 Bankruptcy
Filing for Chapter 13 can stop wage garnishment, repossession and home foreclosure. Immediately upon filing for Chapter 13, wage garnishment ceases and creditors are relegated to receiving payments through the restructuring plan. Where an individual is on the verge of losing their homes or vehicles, filing a Chapter 13 bankruptcy can halt the process as the court will issue an automatic stay and will then restructure the debts so that mortgage and car payments become more manageable. By lowering the interest and reducing monthly payments, Chapter 13 bankruptcy provides a way to catch up on payments. While back taxes and child support are not dischargeable under Chapter 7, they can be worked into a Chapter 13 plan, which would eliminate interest and penalties and create a manageable repayment schedule over five years.
Chapter 13 is also the only type of bankruptcy that allows you to remove a second mortgage. Where there is no equity in the first mortgage then the second mortgage is no longer secured by any assets. A chapter 13 bankruptcy allows a second mortgage, with no equity, to be reclassified as an unsecured debt like a credit card. In the payment plan the second mortgage will be paid the same percentage as any other unsecured debt which usually ends up being pennies on the dollar. This same process can be applied to third and successive mortgages as well.