A Chapter 13 bankruptcy offers many benefits that can help you get back on track. For example, it stops creditors from calling you, and it allows you to pay certain kinds of debts (like recent income taxes) through a repayment plan.
A bankruptcy attorney can help you create a realistic plan for repaying your debts over five years. They will consider all your expenses when creating a plan that the New York bankruptcy court can accept.
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Restructuring Mortgage Payments
When you file for Chapter 13, the bankruptcy court creates a three to five year plan to repay a portion of your debt. The payment plan is usually proportional to your income, and it pays secured debts (such as mortgage and car loans) first and then unsecured debts like credit card debt later on.
When your bankruptcy case is in place, the law imposes an automatic stay that prohibits creditors from making collection calls or commencing lawsuits against you. This is like a legal “stop sign” and it can help you avoid foreclosure, catch up on missed payments, halt interest accrual on back taxes or consolidate unsecured debts.
To qualify for Chapter 13 you must have a steady income that is sufficient to pay your monthly expenses and fund the repayment plan. Our Chapter 13 Bankruptcy Attorneys will help you put together a plan that complies with all of the rules and regulations. We will also protect your assets and stand up to creditors who try to renegotiate the terms of your agreement.
Debt Consolidation
A Chapter 13 bankruptcy attorney will help you restructure your mortgage payments by offering a repayment plan over the course of three to five years. This allows you to catch up on missed mortgage payments, saves your car from repossession and allows you to keep other non-exempt property.
It also helps you pay off unsecured debt, like credit card balances. Your attorney will take a full review of your income, assets and debts. They will then create a feasible proposal of monthly payments that is proportional to your income. Your payments will be applied first to your secured debt, like your mortgage and then to your unsecured debt.
Unlike Chapter 7, you do not have to give up any property in a Chapter 13 case and creditors cannot charge interest on your debt during the payment plan period. Nearly nine in ten of our readers said they were satisfied with their Chapter 13 bankruptcy experience.
Avoiding Foreclosure
If you are behind on your mortgage payments, Chapter 13 can help you avoid foreclosure. It will give you up to five years to catch up on your mortgage payments while also discharging unsecured debts like credit card balances.
A Chapter 13 bankruptcy requires a review of your property, income and debts. It will determine which assets are exempt, and what amount of your income you can commit to a repayment plan. A trustee is appointed to oversee the case and ensure that your creditors are paid from the money you dedicate to the plan.
Many homeowners have fallen behind on their mortgage payments due to unemployment or medical problems. A foreclosure is a complicated process that allows the lender to sell your home to fulfill your debt. A Chapter 13 bankruptcy can stop this process and may even allow you to remove junior mortgages. It can also halt interest from accruing on back taxes and provide an opportunity to repay them over time.
Creating a Repayment Plan
Generally, people choose Chapter 13 bankruptcy when their monthly debt payments are not sustainable and they want to keep certain assets. In these cases, it is important to carefully calculate a monthly budget and provide adequate documentation in the form of pay stubs, bank statements, and affidavits of contribution to prove that you have enough income to meet your obligations.
The bankruptcy code allows for a Chapter 13 payment plan that lasts between 36 and 60 months. During this time, your debts are frozen and all creditors must wait until the end of the payment plan to receive any payments.
During the repayment period, you must continue to pay back any priority debts like past-due alimony or child support and any secured debts, such as mortgage or car loans. Unsecured debts can be paid in full or at a percentage of the balance. If you qualify, a lien strip off may also be possible. This will remove the lender’s security interest and allow you to keep your home or vehicle.
