Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is for individuals who want to catch up past due mortgage or car loan payments and keep their assets. In Chapter 13, the debtor must propose in good faith to pay their debts from future income over a period of time ranging from three to five years. If the court approves the plan of payment, the debts may be settled in this manner, even if the creditors are not willing to go along with the plan. This is why a Chapter 13 plan will reduce or eliminate debt where debt consolidation programs cannot.
After completing the payments under your plan, your debts are discharged. Non-dischargeable federal taxes can also be paid over the term of the plan without interest. However, some debts are not discharged under Chapter 13, such as student loans, child support, and debts arising from criminal or fraudulent conduct.
If you are facing foreclosure on your home or are behind in making payments, Chapter 13 Bankruptcy provides a powerful remedy to keep your home by allowing you to pay your missed payments through your Chapter 13 plan.
Chapter 13 Bankruptcy can also help you to reduce or “strip off” the amount you owe on your second mortgage or home equity loan if your home is now worth less than what you owe on your first mortgage.
This procedure allows you to greatly reduce the amount you have to pay each month to stay current on your
home.
For example, assume you pay $1,500 on your first mortgage, $750 on your second, and $400 on your third (this might be a home equity loan). If your home is worth $200,000 and you owe at least that much on your first mortgage, you can strip off the second and third mortgages. This would reduce your monthly mortgage payment from $2650 to $1,500.
Chapter 13 Bankruptcy may allow you to
keep your car if you are facing repossession. A Chapter 13 plan can reduce or
“cramdown” the amount you owe to the replacement value of your car. For instance, if you owe $20,000 on a car that is only worth $15,000, you can reduce the debt to the value of the car and pay off that amount in equal installments over the life of your Chapter 13 plan. Doing this allows you to keep your car and be able to afford the payments!
Orlando and The Villages
Bankruptcy Attorney Debra G. Simms will review your financial condition and explain the alternatives to help you determine if Chapter 13 Bankruptcy is the right choice for you. Our Orlando and Villages Bankruptcy office is open during weekly office hours. We also offer evening and weekend hours. Contact us today for a consultation.