Chapter 13 provides a means for reorganization for wage earners who do not qualify for Chapter 7, need an opportunity to catch up on mortgage or car payments, or who need to avoid a wholly unsecured second mortgage or home equity loan.
How Chapter 13 Works:
In a Chapter 13 case, the debtor must pay all or part of his or her debts from the future income over a period of three to five years through his or her chapter 13 plan. The Plan must provide that all of the Debtor’s disposable income during the period of the Plan be paid to the Trustee. It is the Trustee’s job to make recommendations to the Court before the Plan can be approved by a Bankruptcy Judge. After the Plan is completed, the Bankruptcy Court will issue a discharge order relieving the debtor of every dischargeable debt listed in their schedules.
Chapter 13 is not for everyone. Most people do better in a Chapter 7, if they qualify. There are situations though, where Chapter 13 can provide an immense benefit. Chapter 13 can be used to cure arrears with a secured creditor, apply for a mortgage modification while a foreclosure action is stayed, avoid a wholly unsecured second mortgage, cure domestic support arrears, and can be useful in many other situations. In addition, as long as a Chapter 13 case is filed in good faith, it can be voluntarily dismissed by a debtor. Schedule a consultation and John Lehr will be glad to go over the pros and cons of Chapter 13 with you and help you choose the right path to a fresh start.