Chapter 13: Debt Consolidation

Chapter 13 Bankruptcy, the “Home Saving/Car Saving Plan”, is a very powerful tool. It can be used to stop home foreclosure or vehicle repossessions, and all other debts allowing you to catch up on missed payments and keep your property.

Chapter 13 is a Bankruptcy Court regulated repayment plan for individuals with regular income that allows them to pay back all or some of their debts from 3 to 5 years. Chapter 13 offers individuals and businesses several advantages over Chapter 7. Most importantly, Chapter 13 allows individuals to keep their property and save them from foreclosure or repossessions. By filing under this chapter, individuals can stop foreclosure and repossession proceedings and may catch up on back payments over time. Nevertheless, if you file for Chapter 13 you must still make all future monthly payments after filing your bankruptcy case. Property can be kept just as long as you can make the regular monthly payments and the Chapter 13 Plan payments.

The interest rate on back mortgage payments, credit card and tax debt is currently 0% in the Chapter 13 Plan!

The Plan can include:

  • Back mortgage payments
  • Homeowner’s Association arrears
  • Back real estate taxes
  • Unpaid state and federal taxes
  • Credit card debt
  • Medical debt
  • Vehicle loans
  • Personal loans
  • Student loans
  • Revenue & Recovery
  • Back child support
  • Alimony

Once the case is filed with the Bankruptcy Court your creditors are completely stopped. When you file for Chapter 13 bankruptcy (or any other kind of bankruptcy), An “automatic stay” goes into effect. The Automatic Stay immediately stops your creditors from trying to collect from you. Creditors cannot repossess your car, foreclose on your house, garnish your wages, empty your bank account, cut off your utility service and welfare benefits or contact you to collect any debt.

*** IF YOU HAVE SECOND OR THIRD MORTGAGE(S) ON YOUR PROPERTY, SPECIAL CIRCUMSTANCES MAY ALLOW THESE MORTGAGES TO BE ELIMINATED (STRIPPED) IN A CHAPTER 13 CASE AND REDUCE YOUR OVERALL MORTGAGE DEBT. This means that you will not have to make payments on the junior mortgages and upon completion of your plan and getting discharge the mortgage company will have to remove the junior mortgage(s) from your property. To qualify the value of your real property must be less than the amount owing your first mortgage. Considering the huge decline in the real estate market in the last few years, many properties fall into this category and junior mortgages are wiped out.

You can also use the Chapter 13 case to refinance your auto loan if the vehicle was purchased more than 910 days ago. We do this by cramming down your car payments and you pay only what your car is worth, not what you owe on it. For example, if you owe $15,000.00 on your car and your monthly payments are now $355.00, we can reduce your monthly payments to $161.00 if your car is actually worth only $6,500.00. Additionally, we can also typically lower the interest rate on the loan down to 7%.