Chapter 13

Are you trying to save your home from foreclosure? Is the "repo" man looking for your car?

Chapter 13 is for people with income and with assets that they do not wish to lose. Your main attention is to preserving your assets.

Chapter 13 puts an immediate stop to foreclosures and repossessions. It allows you up to five years to catch up on the missed mortgage payments or to pay your secured creditors. Most times we are able to reduce the interest that you are paying on your cars and the other creditors, but not your mortgage.

In many cases, you can wipe out some or all of your credit card debt as well as any other unsecured creditors. It is a good opportunity to keep home, cars and personal property when you need time to catch up.

Under Chapter 13, you are making payments to a trustee, usually by payroll deduction, who in turn pays the creditors your attorney has proposed under the "Plan". Your unsecured creditors could receive anywhere from 100 cents on the dollar to 0 cents on the dollar with no interest. It is all based on your income and normal living expenses.

Chapter 13 bankruptcy is a debt repayment plan through which you consolidate your debts and make a payment on your debt over a three- to five-year period. While in a Chapter 13 debt repayment plan, the creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.

Immediately upon filing and your creditors being notified, they must cease all communication with you as the court will issue an automatic stay. This includes foreclosures, repossessions, wage garnishments, harassing bill collection calls and collection letters. You will be protected from these until your case pays out.

One very important thing to remember about Chapter 13 bankruptcy is that you must be working or have a consistent source of income for your repayment plan to be approved by the court. Not only must you be able to pay for your monthly living expenses, but you must also be able to make a payment to the court to consolidate your debts.

Debts that are generally consolidated in a Chapter 13 bankruptcy are mortgage arrears, balances on vehicle loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 bankruptcy consolidation.