Chapter 13 Bankruptcy
In a Chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property — especially your home and car if you are behind on payments — which might otherwise be lost, if you can make the required payments. Your Chapter 13 plan payments will be at least enough to pay your past due mortgage payments, a percentage of your unsecured debt, and the trustee commission of about 11% of all plan payments. You must also make all future mortgage and car payments, in addition to the plan payments, if you wish to keep the property or car. The most important thing about a Chapter 13 case is that it will allow you to keep valuable assets which might otherwise be lost if you can make the required payments.
You should consider filing a Chapter 13 plan if you:
- Are behind on your mortgage payments and the lender will not work with you;
- Have a second or third mortgage on your single family home and the property’s value is less than the first mortgage;
- Have rental property (including a multi-family residence) and the property’s value is less than any mortgage;
- Have valuable property which is not exempt, but you can afford to pay its value to your creditors over time;
- Have certain debts that will not be discharged in a Chapter 7 bankruptcy, such as a marital property division; or
- You have excessive disposable income, which generally means that you are saving hundreds of dollars each month.
- Your income is above the IRS collections standards, something which we calculate for you if necessary (if your income is above the median family income).
You will need to have enough income in Chapter 13 to pay for your necessities and to keep up with the required payments as they come due.
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