A Chapter 13 bankruptcy, also referred to as a “debt consolidation” plan, is ideal for individuals with a reliable source of income. Under Chapter 13 of the Bankruptcy Code, wage earners can enter into a payment plan with creditors, whereby they agree to repay debts over an extended period. Most Chapter 13 payment plans last three to five years. A Chapter 13 bankruptcy plan allows you to keep your property as long as you remain in the plan, and make your payments. Chapter 13 is ideal for stopping mortgage foreclosures, car repossessions, interest, and late fees. Most payments are reduced and consolidated in one monthly payment.
Chapter 13 is a payment plan which is frequently called debt consolidation. The payment plan is usually MUCH LESS than what creditors are demanding! We can usually consolidate all debts at a payment that is affordable while protecting your wages and property. The harassment stops, no one can garnish wages, take property, repossess the car or truck, foreclose on the home, etc. But one needs to file a case in order to get the protection. Interest and late fees are often waived under Chapter 13 plans. Many plans provide for a percentage pay-back if the client cannot afford to pay all debts in full. This means that Chapter 13 will often be the best payment plan for you.
In most Chapter 13 cases the payment is based on your budget....your ability to pay. That is why we need to go over your income from your pay-stubs and your living expenses in detail. Our office is unique in that we have a computer program which calculates your budget of income and expenses while you watch it on the computer monitor. You can see the income and expenses broken down as we type it in, and see just where your money goes each month. This enables us to calculate how much you can afford to pay toward your debts very quickly, while you watch us. You just need to know how much you make on average, and how much you spend on house payments, rent, utilities, insurance, groceries, gasoline, etc. House payments and rent are generally not included in the chapter 13 plan unless you are behind. If your mortgage is past due, a chapter 13 can help catch it up and stop a foreclosure from occurring if the case is filed on time. Car payments are usually included in the chapter 13 plan and the car is paid off as part of the plan. Generally, no one can repossess or seize your car or other property once your chapter 13 is filed. Your wages, earnings, bank accounts, and personal property are protected by the Chapter 13 “automatic stay” against creditors.
If one waits too long, the property is lost for good. It is much easier for us to protect what you have than to try to get it back for you once it is seized by a creditor! So it is best to consult quickly. The risk in chapter 13 is waiting too long to do something! Also, the longer one waits, the more interest and late charges are added to balances. Chapter 13 stops interest and late charges on most debts, so prompt action is best.
Chapter 13 is a better option for many who may risk losing assets in a chapter 7 case. Where in chapter 7 a trustee is appointed to look for non-exempt assets to sell in order to pay debts, the chapter 13 trustee receives payments from the debtor and does not liquidate or seize control of any of the debtor’s assets. In this way a person with assets that might be at risk in a chapter 7 would select chapter 13 in order to safeguard all assets. The stipulation would be to maintain the payments provided for by the plan.
Chapter 13 plans are different for different clients. Only a qualified attorney with experience can draft a good plan that works well and meets the needs of the client. While some bankruptcy attorneys have little experience with Chapter 13 plans, we are experienced in this field and have filed thousands of bankruptcies in the Western District of Michigan.
Chapter 13 is very useful in order to save a house from foreclosure. The plan will provide for the maintenance of the monthly payment on the house and then pay the lender a little extra each month so that the mortgage is caught up by the end of the plan. Once the plan is completed, the debtor will continue to pay the normal monthly mortgage. In the meantime, foreclosure is stopped while the default is cured over the life of the chapter 13 plan.
Chapter 13 is very useful to stop repossession of cars, trucks, automobiles and other assets that are needed by the debtor. Instead of paying the usual payment and meeting the demands of the lender to catch up missed payments, the chapter 13 plan can pay the loan off over a period of time at a reduced rate when combined with other debts that are owing. No one can take the debtor’s assets, property or vehicles while payments are maintained and the lender is protected by insurance on the property. The debtor is responsible for paying insurance.
For those who can afford to pay on their debts but are drowning in interest, late fees or penalties, chapter 13 is useful for reducing payment on everything from credit card debts, signature loans, taxes and auto loans to medical bills, lawsuit claims and judgments.
At our office, we regularly provide legal counsel to individuals who choose to file for protection under Chapter 13. We represent clients in Chapter 13 filings throughout the Western District of Michigan. We know that filing bankruptcy is stressful. Accordingly, we emphasize personal service in all our dealing with our clients. As with other types of bankruptcy filings, a Chapter 13 bankruptcy proceeding provides debtors with the protection of the automatic stay. Once a Chapter 13 bankruptcy is filed, creditors are prevented from making any further attempts to collect a debt, whether through letters, calls, collection agencies or legal filings.
Contact our experienced bankruptcy attorneys to discuss the benefits of a Chapter 13 bankruptcy filing.