Chapter 13 – Repayment Plan

The principal purpose of the Bankruptcy Code is to grant a “fresh start to the honest but unfortunate debtor.”— United States Supreme Court

If you want to…

• Stop a foreclosure and keep your house;
• Stop the repo man and keep your car;
• Stop the IRS from taking your property;
• Stop the family court from threatening jail over back alimony or child support;
• Stop a wage garnishment and work out a payment plan on your terms —

then a Chapter 13 may be for you.

What Is a “Chapter 13”?

Chapter 13 is, essentially, a federal court-enforced repayment plan where you agree to repay some or all of what you owe over a three- or five-year period, depending on your income. Unlike a Chapter 7, in a Chapter 13 you get to keep all of your property — and you also benefit from the automatic stay that stops your creditors from chasing you.

How Will a Chapter 13 Help?

• Save your home from foreclosure. If you are behind on your mortgage and the lender is threatening to foreclose, you can use a Chapter 13 to stop the foreclosure and force the lender to accept your delinquent payments over a lengthy period to get current. (You still have to make your regular payments.) A Chapter 13 must be filed before the sheriff's sale — timing is essential.
• Get rid of a second mortgage or other liens. If your house is worth less than you owe on the first mortgage and you have a second mortgage or home-equity line of credit, you may be able to use a Chapter 13 to strip the liens that exceed the actual value of the property.
• Reduce liens on other property to its value. If you have a second property that is “underwater” (such as a rental or vacation home), or owe more on a car, truck, RV, or boat than it is worth, you may be able to use a Chapter 13 to pay no more than the actual value of the asset and lower your monthly payments.
• Stop repossession and keep your car (or get it back if it was just repossessed) by repaying the amount you owe, or the actual value of the property (whichever is less), over a three-to-five-year period.
• Stop the IRS from garnishing wages, filing liens, or seizing property by forcing a long-term repayment plan on non-dischargeable tax debt — and, in some cases, discharging the remaining amounts.
• Catch up on back alimony or child support over a long period and avoid consequences such as jail time.
• Consolidate and discharge debt. A Chapter 13 plan works like a consolidation: one affordable monthly payment, with the balance of unsecured debt discharged at the end of the plan. During this time you are protected from creditors.

Other Advantages of a Chapter 13

• Automatic stay protection. The moment you file, all creditors must immediately stop trying to collect — a mortgage company cannot foreclose, a lender cannot repossess your car, and no one can sue you or continue a lawsuit.
• No tax consequences. Unlike debt settlement, you cannot be charged income tax on a debt discharged in bankruptcy.
• Flexibility. A Chapter 13 is voluntary. If your circumstances change, you have the right to modify your plan, convert to a Chapter 7, or dismiss your case if it is no longer working for you.

Do I Qualify for a Chapter 13?

If you are a person with regular income — for example wages, self-employment income, a pension, business income, or Social Security — you likely qualify to file a Chapter 13, as long as:

• your unsecured and secured debts fall under the statutory Chapter 13 debt limits. These limits are set by the Bankruptcy Code and are adjusted periodically, so we will confirm the current figures with you at your consultation; and
• you did not have a previous bankruptcy case dismissed within 180 days for failing to comply with court orders or after creditors sought relief to recover liened property.

Additionally, before filing you must take an approved credit-counseling course, which can be done online or by phone in about an hour from home.

What Do I Need to Do?

If you want to take advantage of the benefits of a Chapter 13, call our office at 248-417-9800 or contact us online to set up a free, no-obligation, confidential consultation. Waiting will not make the problem go away — it will only make it worse. Our phone lines are available 24 hours a day.

Pursuant to 11 U.S.C. § 528 we are required to state that bankruptcy relief is provided in accordance with Title 11 of the United States Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.