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Chapter 13 Bankruptcy
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a reorganization of debts that allows a debtor to make payments to creditors over a period of three to five years. Chapter 13 is sometimes called a "wage earner's bankruptcy" because it requires that the debtor has a stready source of income for the duration of the repayment plan. Generally, a homeowner can file a Chapter 13 bankruptcy to stop a mortgage foreclosure if the homeowner:
  • Is employed or has another regular source of income
  • Has sufficient income to make Chapter 13 plan payments as well as all current mortgage payments and living expenses
  • Does not have debts in excess of the statutory caps for Chapter 13 bankruptcy

Chapter 13 bankruptcy is an option for thise who do not qualify to file Chatper 7 bankruptcydue to the means test. However, many people choose Chapter 13 when filing bankruptcy because it may allow debtors to keep their home, car, and other types of secured debts.

How can Chapter 13 help with foreclosure?
Chapter 13 bankruptcy was designed to stop foreclosure and may provide you with the protection and relief you need to stay in your home and catch up on your past-due debts. The filing of a Chapter 7 or Chapter 13 bankruptcy most often results in an automatic court order through the bankruptcy court that prevents a creditor, such as a lender, from taking any action against the person filing the bankruptcy. This court order ultimatly stops the foreclosure proceeding. In order to proceed with foreclosure, the lender must then get special permission from the bankruptcy court to do so. Keep in mind that it is better to start this process before it is too late. If you wait too long and the court order does not come through before the foreclosure date your home may be lost. Act now and contact Law Advisors, S.C. today!
How does Chapter 13 work?
Within 15 days after filing a Chapter 13 bankruptcy petition, the debtor must file a proposal plan, setting forth his or her income, allowable living expenses, and proposed payment to the trustee for the benefit of creditors. Current payments must be kept current after the Chapter 13 bankruptcy is filed. Homeowners must make all mortgage payments that come due during the Chapter 13 bankruptcy repayment plan, and failure to make current payments on time may mean that the bankruptcy court lifts the automatic stay and allows the mortgage company to resume foreclosure proceedings.
Assuming that all plan payments are made in a timely manner, the homeowner may catch up the past due mortgage payments over the 3-5 years of the repayment plan, or may discover that he or she is eligible to refinance the property after a period of repayment.
For more informantion please contact us
Toll Free: 866.235.7100
Headquarters: 608.242.9700
Fax: 608.242.8788