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A Chapter 13 case is used to cure mortgage arrears, stop foreclosure sales, and to file bankruptcy cases where the client has too much in income or assets to file in Chapter 7.

• Advantages of a Chapter 13 Bankruptcy Case
• The Qualifications and Mechanics of a Chapter 13 Case
• Risks and Potential Issues in Chapter 13
• How Our Office Can Represent You in Chapter 13

A Chapter 13 bankruptcy case is often used by persons in foreclosure to stop the foreclosure process, including foreclosure sales, so as to cure their mortgage arrears over a period of time. Debt other than mortgage arrears, such as credit cards, is also cured under the Chapter 13 plan, often without interest and at a reduced rate. Under a Chapter 13 case, a monthly payment plan is developed which allows the gradual curing of all of the client’s debt including mortgage arrears over time, up to five (5) years.

Please click here for more specific explanations about Chapter 13 bankruptcy and how it may help you in your present situation.

Advantages of a Chapter 13 Bankruptcy Case

Chapter 13 is a very effective type of bankruptcy case and is used by individuals in various situations to reorganize and reduce debt, including mortgage, car loan arrears, credit cards, taxes and student loans over a five (5) year plan that is binding on their creditors. Chapter 13 is often filed by individuals seeking to overcome difficulties due to house foreclosures or vehicle repossessions. Chapter 13 is also used extensively by individuals who seek to deal effectively with their overwhelming debt, but who should not file in Chapter 7 due to incomes or asset values that exceed certain levels where a Chapter 7 may entail risks or potential difficulties or may not be possible. The filing of a Chapter 13 case will instantly cause an “automatic stay” to go into effect which will stop all creditor activity including imminent foreclosure sales or repossessions. The Law Office of Ronald D. Weiss regularly represents its clients before the United States Bankruptcy Court in Chapter 13 cases, including in the filing and amending the numerous documents and plan needed to proceed in Chapter 13. At the end of the Chapter 13 plan which is usually five (5) years or sixty months (60) in duration, but can be paid earlier, the client’s debt is usually “discharged” or legally forgiven.

The Qualifications and Mechanics of a Chapter 13 Case

During the Chapter 13 case the client will on a monthly basis go back to making post-petition mortgage payments and, in addition, the client will make Chapter 13 plan payments to a court-appointed trustee. The combination of such payments will allow the client not to fall further behind in mortgage arrears while at the same time catching up and curing the arrears that existed before the filing of the case. A budget, a Chapter 13 plan and bankruptcy schedules, as well as significant other documentation, need to be submitted to the Chapter 13 trustee and Bankruptcy Court as part of the process necessary to confirm the Chapter 13 plan.

Risks and Potential Issues in Chapter 13

If you have had two (2) or more chapter 13 cases pending before the Bankruptcy Court in the last year a Chapter 13 case may not be able to stay a foreclosure sale against your property. To obtain a stay in such situation (of two or more pending bankruptcies in the last year) you will need to retain a bankruptcy attorney to quickly move by null in front of the Bankruptcy Court and demonstrate strong financial “changes in circumstances” that positively affect you chances of success in another Chapter 13 case.

“Secondary loan cram downs” (or “strip downs”) are a possibility in Chapter 13. If you have a secondary mortgage or home equity loan which is totally unsecured, in a Chapter 13 case it can be deemed to be an unsecured debt and paid at a vastly reduced amount. To accomplish this we need to start an adversary proceeding in the Chapter 13 case and show the Court the complete lack of equity in the property. The client needs to stay in Chapter 13 for the full duration of the plan for this form of relief to have permanent effect. If you believe you quality for such a motion and believe that you can stay long term in your Chapter 13 case until its completion, than a secondary loan cram down is potentially a powerful method of reorganization and should be discussed with us.

How Our Office Can Help Represent You in Chapter 13

Most Chapter 13 cases are highly effective in giving clients an opportunity to reorganize and reduce debt over a protracted time while being protected from their creditors. However, Chapter 13 cases, like other types of bankruptcy cases can be complex, and to effectively proceed in a Chapter 13 case an individual would usually need to be represented by a bankruptcy attorney. The Law Office of Ronald D. Weiss, P.C. can discuss and advise you about Chapter 13 and how and whether it can help your particular circumstances.

For more detailed information about Chapter 13, please click here.

Please call us at (631) 271-3737, or Email us for a free consultation to discuss such legal options in greater detail.