Sometimes, if you are deemed to have disposable income, Chapter 7 is not available to you. In those cases, you are still able to file a Chapter 13 which is a reorganization of your debts. This can also be used to save a secured asset such as a home when you are behind on the mortgage. Again, the filing of the petition acts as a stay against any efforts to collect on the debt including foreclosure. The court is asked to confirm a repayment plan (typically over 5 years) which will pay back some portion of your debt. In the case of a secured asset, the plan will pay back any arrearage and allow you to retain the asset. Once the plan is confirmed and payments are completed, any remaining debt is discharged.
Not being able to pay bills such as your mortgage, car payments and property taxes can be a terrifying experience. It seems that once you are late it snowballs out of control almost immediately. As unnerving as this experience is it is important that you do have options that will prevent you from losing your home, car and other assets. If you want to explore your options regarding obtaining financial relief you should speak with a Norristown lawyer handling bankruptcy cases. At The Law Offices of James V. Monaghan I can help you save your house and get relief from creditors. I possess many years experience representing clients in Montgomery County, Pennsylvania.
Filing Chapter 13 Allows You To Consolidate Debt And Repay Over Time
Chapter 13 bankruptcy provides debt relief for:
- People with severe arrears on a mortgage who wish to avoid foreclosure
- People whose income is too high to qualify for Chapter 7 bankruptcy
- People with child support arrears
- People with spousal support arrears
- People with non-exempt assets
By filing a Chapter 13, your attorney and the bankruptcy trustee will negotiate a repayment plan to repay a portion of your debts over a period of years. Based on your disposable income and the type of debt owed, after household expenses, you will make monthly payments for three to five years. After that, any remaining debts are discharged and you are in the clear.
Will I Lose Anything in a Chapter 13 Bankruptcy?
Absolutely not. Any foreclosure proceedings, repossessions, or collection actions are immediately halted when you file. Creditors cannot call your home or threaten lawsuits. In addition, you will not forfeit any assets or possessions.
Can’t I File for Chapter 7 Bankruptcy Instead?
Not everyone qualifies for Chapter 7 bankruptcy, which wipes out qualifying debts completely. First of all, if your mortgage is in default and you want to keep your home, a Chapter 7 will not be effective. Chapter 13 bankruptcy provides protection from foreclosure and a repayment plan to make your current.