Chapter 13 Bankruptcy Attorney – Individual Reorganization
Saving Home and Property
Chapter 13 is a reorganization for individuals or married couples and is also called a “wage earner plan.” Chapter 13 can only be filed by individuals or married couples who have regular income and whose unsecured, liquidated and noncontingent debts do not exceed $336,900 and whose secured, liquidated and noncontingent secured debts do not exceed $1,010,050 (these debt limits are adjusted every three years). .
The concept of a Chapter 13 is that with the petition for bankruptcy, a debtor also files a plan. Under the plan, unsecured creditors (for example, credit cards) are paid something over 36-60 months and the payments usually amount to much less than you are currently paying. If your home mortgage is in arrears you can spread out the unpaid back payments over the life of the plan. Your payments to the mortgage company will be the regular mortgage payment plus a fraction of the back payments (for example, in a 60 month plan, the regular mortgage payment would be increased each month by 1/60th of the back due payments). Modifications of mortgages in bankruptcy is usually much more successful than in a state court modification proceeding. Payments on debts are made to a single person, the Chapter 13 Trustee. This Trustee then remits the payments to the appropriate creditor.
The Chapter 13 Trustee also takes a commission (currently 10%) on the payments made through the Trustee. If the plan proposed by the debtor is confirmed by the Court and if the debtor makes the payments promised in the plan, at the end of the plan period the debtor is reinstated in his home mortgage and his unsecured debts are then discharged. If a debtor cannot make his or her payments under the proposed plan, the debtor may choose to dismiss the Chapter 13 (which leaves the debtor as if no bankruptcy had been filed) or convert to a Chapter 7.
Getting Rid Of Second Mortgages
If the value of your home is less than you owe on your first mortgage you may be able to get rid of or “strip” the second mortgage or home equity loan.