Chapter 13 – Reorganization
Even as the economy recovers, you may be facing foreclosure due to arrears on your mortgage. If your house is facing foreclosure, Chapter 13 allows you to reorganize your debt and save your home. Under the Chapter 13 repayment plan, you can put the arrears of your mortgage in the repayment plan. This would allow you to pay the arrears interest-free and avoid foreclosure of your mortgage. Generally, Chapter 13 repayment plans are anywhere from 3-5 years in length and you pay a percentage of unsecured debt along with your arrears or other secured debt. Chapter 13 allows you to pay a majority of your attorney’s fees through the plan too!
Other more popular reasons for choosing Chapter 13 include prior bankruptcy filings or above median income. As mentioned, I can determine what you qualify for and give you an estimate during your initial consultation. If bankruptcy is your best option, I will determine if you qualify to eliminate or reorganize and fully explain the process from beginning to end.
What does Reorganization mean?
In a Chapter 13 bankruptcy, you work with your attorney to draft a repayment plan for your debt to include your secured and unsecured debt. An experienced bankruptcy attorney should arrive at a plan payment that fits your budget and follows the basic Chapter 13 repayment plan requirements. The Trustee will make sure the plan is feasible and in the best interests of the creditors. For these reasons, most experienced bankruptcy attorneys should give you similar estimates for your repayment plan.
After filing your case and submitting your playment plan proposal, the next step is meeting with the Trustee or hearing officer. This meeting is also called the meeting of creditors since creditors have the opportunity to attend the meeting, or the Section 341 hearing because section 341 of the bankruptcy code codifies this procedure.
During or after the hearing the Trustee may ask for amendments to the plan or bankruptcy petition. If these changes are agreed upon, the Trustee may find the plan “Favorable” and recommend the Bankruptcy Judge confirm the plan. Once a plan is confirmed, it is COURT-ORDERED and the creditors, including mortgage companies, must adhere and accept the payments in accordance with specifications. The automatic stay protects against creditors collecting on debt outside of the payment plan.
If a creditor objects to the confirmation of the plan or if the creditor files a motion with the court, your attorney may argue this point of contention before the Bankruptcy Judge. Also, the Trustee may object and request a court date with the Bankruptcy Judge.
As mentioned, most Chapter 13 repayment plans range from 3 to 5 years. Your income generally determines the amount and length of the plan. Chapter 13 is often called “The Wage Earner’s” plan. In most cases, at the conclusion of the plan, any remaining unsecured debt is discharged. If you filed Chapter 13 because you have mortgage arrears, you should be completely caught up on your mortgage at the conclusion of the plan and resume regular mortgage payments.
Call me at (800) 580-7432 for a free phone consultation and estimated plan payment for Chapter 13 reorganization. Regardless of your income level, you have options to reorganize or eliminate in accordance with the Bankruptcy Code.