If you need to file for bankruptcy, do not do it alone. One mistake made in filling out the paperwork could make the process more expensive and more time-consuming. Contact the Turner Law Firm, PLLC today – we can help!
This kind of bankruptcy is often used by those who want to save their home, need their car to get to work or are facing a small business bankruptcy or tax debts.
By filing Chapter 13, you keep your property, pay back some of your debts over time and end up with a fresh start. Chapter 13 filers are put on a repayment plan, which describes in detail how much you will pay each of your debts. Each person’s Chapter 13 repayment plan is different.
According to the laws, some of your debts must be repaid in full. The plan also includes payments for things such as your car loan or mortgage, and it can require some payments to debts such as credit cards and medical bills.
- An individual (no corporations or partnerships);
- Have a regular income greater than your reasonable living expenses; and
- Have liquidated, unsecured debts not exceeding $336,900 and secured debts not exceeding $1,010,650.
If your total debt burden is too high, you are also ineligible and Chapter 7 may be the route to take. A “secured debt” is one that gives a creditor the right to take a specific item of property (such as your house or car as collateral repayment) if you don’t pay the debt. An “unsecured debt” (such as a credit card or medical bill as they have no collateral) doesn’t give the creditor this right to “take back” anything.
- They are behind on their house and want to keep their house
- They are behind on car payments and want to keep their car
- They are above the Means Test
- They owe a lot of taxes
- They owe a lot of student loans and are having their wages garnished and/or
- They have a lot of non-exempt (unprotected) equity in assets
In a Chapter 13 bankruptcy you would make one payment to the bankruptcy Trustee and they would take that payment and divide it up and pay your regular mortgage and a portion of the amount past due each month so that at the end of your bankruptcy you will be current on your mortgage.
Any changes to your mortgage payments, including increases in payments due to interest rate changes, escrow changes, etc. will be sent to the Chapter 13 Trustee from your mortgage company. As a result, your Chapter 13 plan payments to the Trustee may increase or possibly decrease periodically due to changes in your mortgage. The Chapter 13 Trustee will provide you with notice of the change in your Chapter 13 plan payments prior to the effective date of the change.
As you can see, Chapter 13 bankruptcy law is complicated and, for most people, often confusing. Contact Turner Law Firm, PLLC for an evaluation so that we may guide you through the bankruptcy process.
Also important to know, a Chapter 13 bankruptcy will not change your mortgage payment. Your mortgage payment will stay the same while within the bankruptcy. The only way you can change the mortgage payment is if you get a modification or refinance your mortgage(s). Often times, though, mortgage companies are more likely to work with you in modifying your loans while in a Chapter 13 bankruptcy.