by Mark E. Godbey, Lawyer Referral Service Panelist
In a Chapter 13 (reorganization) case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property—especially your home and car—which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a Chapter 13 plan if you:
- Own your home and are delinquent in payments or the home is in foreclosure.
- Own your home and have multiple mortgages or judgment liens against the property, as Chapter 13 may be able to help gain the equity back in your home.
- Own your car and are delinquent in payments and in danger of being repossessed.
- Are behind on debt payments, but can catch up if given some time.
- Have valuable property which is not exempt, but you can afford to pay creditors from your income over time.
You will need to have enough income in Chapter 13 to pay for your necessities and to keep up with the required payments as they come due.