What can Chapter 13 Bankruptcy do for you?

Stop Repossession / Stop Foreclosure / Modify a Mortgage

Chapter 13 bankruptcy has several different variations to it depending on your facts. Each case is generally different and the results or options available for every client can vary. Chapter 13 bankruptcy is generally referred to a reorganization of your debts. In short it takes each debt and categorizes it into different groups. Each group has different rights and can be treated differently.

Priority debts have to be paid in full during the term of the chapter 13 bankruptcy. The chapter 13 bankruptcy can be between 36 and 60 months long. Examples are child support, state and federal taxes / IRS, alimony and wages.

Secured creditors are either paid in full, paid at a reduced value, surrendered back to the creditor or left alone depending on the type of debt, if you are in default and terms. Examples are car, home or furniture loans.

General unsecured are debts that are not priority or secured. Examples are medical, credit cards and signature loans.

 Chapter 13 Bankruptcy and Mortgages

Chapter 13 bankruptcy is most commonly used to save homes from foreclosure. It allows a person to stop the lawsuit / foreclosure and reorganize the loan. It does this by stopping all penalties and interest on the back payments or arrearages and allowing a person to pay this arrearage current over a 3 to 5 year period while making your regular monthly mortgage payments.

If the mortgage has ballooned or come due it will allow you to pay the entire loan of over a 5 year period.

Chapter 13 Bankruptcy and Mortgage Modifications

Chapter 13 bankruptcy has also been modified in recent years to allow a person to stop a foreclosure and force the mortgage company into a mediation program set up by the courts. This also a person to present income and expenses to the mortgage company and try and work out a medication of the loan. The Chapter 13 Bankruptcy can't force the mortgage company into a medication it can only force them into mediation. This has been very successful and even though result may vary we have seen everything form principle and interest rate reductions to 40 year mortgage created under the modification program. even for mortgage that are behind 2-4 years. The best results are seen when a client actively participates in the modification program and supplying the documents and information in a reasonable time period. Most denials are caused by the client just not participating or loosing income.

Chapter 13 Bankruptcy and Vehicles

Chapter 13 Bankruptcy is also use to save vehicles that are behind. It allows a person to stop the repossession and start paying the lender back for the car over a 3-5 year period generally at a reduced interest rate. If the car was purchased more than 2.5 years before filing the chapter 13 bankruptcy it can be crammed dawn to the NADA replacement value or if it was refinanced at any time.