Chapter 13 Bankruptcy

Reorganize Your Finances

Chapter 13 is also known as reorganization. It includes creating a three to five year plan whereby you make payments on your debts to your court appointed trustee. Your trustee collects the money you agreed to pay and gives a percentage of it to your creditors. Here’s the secret they don’t want you to know: you don’t have to pay all your creditors back! And the ones you do pay back only receive a small percentage of what you owed them! The credit card companies, the banks, the mortgage companies and the medical bills only get a small portion of what you pay, depending on how much you can afford to pay each month.
There are advantages to each kind of bankruptcy, but one size does not fit everyone. That’s why here at our law firm we sit down with you, find out exactly what’s going on and give you all your options regarding what’s going to be best for you, your family and your future.

Your Best Effort

Chapter 13 is what we call a “best efforts” plan. You pay what you can afford, your “best efforts,” for 3 to 5 years. What’s not paid back is discharged as long as you stick with the payment plan. There are certain debts you have to pay in a Chapter 13. For example, if you want to keep your car, you have to continue paying for it; you just can’t wipe out an auto loan. However, there are certain things we can do to make your car payment more affordable and reduce your monthly payment amount. If you want to save your house, you have to continue paying the mortgage. If you have missed payments in the past, you must make them current. Your house and your car are known as “secured debt.” In other words, they are secured by a physical asset that could be taken and sold to repay part or all of your debt. This is compared to credit card debts and medical bills which are known in the industry as “unsecured debts.” In general, there is a lot more flexibility and negotiating room when dealing with unsecured debt. For example, some clients will only pay as little as $50 per month over 3 to 5 years towards their credit card bills and at the end, everything that’s left is forgiven. Some clients who qualify for a Chapter 7 but elect to file a Chapter 13 in order to save their house will pay NOTHING to unsecured creditors! We have some clients who must pay a lot more than that and that’s why it all depends on your specific situation.

Goodbye Second Mortgage

A Chapter 13 has a lot of advantages even when dealing with secured debts. For example, under the right circumstances we can even “strip off” your second mortgage. If you meet certain criteria we are allowed to completely remove your second mortgage so that you only have your first or primary mortgage remaining. That alone could reduce your monthly mortgage payment by hundreds or even thousands of dollars. Chapter 13 bankruptcy is based on a model of only paying what you can afford; it’s based on your best efforts. Once you go through the process and as long as you stay current with the agreed upon payment plan you walk away debt free! Your car is paid for. Your home is current and you are out of debt. What more can you ask for? Call us today and learn how to get your finances back in order with a fresh start.