Chapter 13 Bankruptcy
Reorganization and keeping property
Chapter 13 involves monthly payments over a longer period of time, usually 3 to 5 years. If you are trying to avoid foreclosure or repossession by getting caught up on your mortgage or auto payments, strip a second mortgage, or pay non-dischargeable, Chapter 13 may be your only option. Chapter 13 is also for people whose income is too high to qualify for Chapter 7 or who would lose property in a Chapter 7.
Reasons to file a Chapter 13 bankruptcy
For some people, it's the best option.
For others, it's virtually the only option.
We generally recommend Chapter 13 for individual or couples who are behind in mortgage payments and want to get them caught up, who owe substantial non-dischargeable tax debt, who have so much property that they would lose some in a Chapter 7 case or would not qualify for Chapter 7 due to having too high of an income or having filed a Chapter 7 case within the last eight years. Chapter 13 will allow them to get the mortgage payments caught up over a five year period, to payoff the tax debt without further penalties or interest, to keep property which they would otherwise lose in a Chapter 7 case and make affordable payment over three to five years, discharging any balances owing.
Foreclosure and Auto Repossession
If you are behind on mortgage or car payments, Chapter 13 can help.
A Chapter 13 bankruptcy allows a person to stop a foreclosure or auto repossession and get caught up on missed payments, generally over 5 years. With a house, the person would also need to make regular mortgage payments commencing with the month after filing, but with a car, there can be even more favorable options depending upon a number of factors, including how long the person has had the loan.
Getting rid of judgment liens, abstracts of judgment, and second mortgages
Chapter 13 allows you to turn a secured debt into an unsecured debt which then might receive a partial payment or no payment at all.
Chapter 13 Discharge
What Debts are Discharged?
Most debt can be discharged in a Chapter 13 bankruptcy , including some debts that are not discharged in a Chapter 7:
Credit card debt
Income tax debts under certain circumstances
Marital equalization debts