So the foreclosure is stopped and your plan of payment has been confirmed by the Bankruptcy Court. But those payments are huge because they are designed to reinstate your mortgage by making up all your back payments and foreclosure costs as well as your current payments in the limited time of three to five years. You are struggling, but you will do anything to save your home. And then one day after about a year or so, the clouds break, the rainbows appear, and miraculously a mortgage modification arrives in the mail where the lender agrees to lower your payment and reinstate the mortgage as current if you just make your new payments on time. No back payments to be made up. Hallelujah!!! Salvation has arrived!
Source: bankruptcylawnetwork.com
Video: Chapter 13 Bankruptcy Information: Overview of Chapter 13 – FindLaw
Chapter 13 Bankruptcy Keep Your Property & Repay Debts Over Time
After a 341 hearing, a debtor or the legal representative needs to attend a hearing open to the public on the repayment plan. At the hearing, a judge will discuss a person’s repayment plan with the trustee, and ask the debtor or the attorney any questions to make sure the person is able to make the monthly payments under the plan. The creditors may object to the plan. Once a plan is approved, a debtor begins making payments pursuant to the plan. Part of the payments goes towards paying the trustee’s fees. When the repayments are complete, any remaining unpaid debts will be discharged in full.
Source: sbkass.com
Differentiating Between Chapter 7 and Chapter 13 Bankruptcy
Here again, the main benefit of Chapter 13 over Chapter 7 is that the petitioner will be able to keep his properties that would or else be sold off to repay the unsecured creditors whom you owe money. A debtor who will file Chapter 7 can only retain the non-exempt properties by paying the trustee with the cash value of the property. You can repay your debt according to the new repayment plan that will be set by the Bankruptcy court. You can even feel satisfied about paying back a portion of your debt through this type. You can classify your creditors according to the priorities but only if this is accepted and allowed by the court. The automatic stay that will be imposed on the debtor will also be extended to the co-debtors who have even guaranteed the loan on behalf of the debtor.
Source: thestudentappeal.com
Advantages And Disadvantages Of Chapter 13 Bankruptcy
Also known as a wage earner’s plan, Chapter 13 bankruptcy is for those persons who wish to have a financial reorganization monitored by a bankruptcy court. The purpose of Chapter 13 is to allow a wage-earning debtor to undergo a rehabilitation plan as long as he adheres to such plan approved by the court. Conversely, Chapter 7 bankruptcy provides full and immediate relief from overwhelming debts. A debtor creates a repayment proposal to his creditors to pay his debts in installments in 5 years time or less. If the debtor’s monthly income is less than the state’s average income then he will be allowed to pay his debts in 3 years. If his monthly income is more than the state’s average income then the term of installment is for 5 years. While the debtor is under a financial rehabilitation plan, his creditors must cease from their collection efforts.
Source: bankrupted.com
Denver Chapter 13 bankruptcy homeowners should take note
In a Chapter 13 bankruptcy filing, Denver homeowners are supposed to be protected from further charges accruing during the pendency of their case, the bankruptcy court decides otherwise. Federal Rule of Bankruptcy Procedure 2016(a) specifically requires that lenders must obtain court permission before they can collect any reimbursable fees or costs during the pendency of a Chapter 13 case. Homeowners who feel that a home lender may have violated this particular requirement may want to research whether they may have recourse under the law to prevent a home lender from improperly charging them such fees.
Source: denverbankruptcylawblog.com
Bankruptcy Explained: Chapter 13
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Source: bankruptcylawmilwaukee.com
4 Ways Chapter 13 Bankruptcy Can Help Homeowners
Chapter 13 can eliminate second and third mortgages. This may be an option if you don’t have equity with your first mortgage to cover your second or third. If your home has dropped in value there may not be enough equity to secure the value of the later mortgages. The court may decide to strip the later mortgages and redefine them as an unsecured debt, which has less priority in a Chapter 13 case.
Source: allmandlaw.com
9th Circuit Rules That Chapter 13 Filers Cannot Contribute to 401(k) During Bankruptcy
Circuit BAP did, however, say that if you are making payments on a retirement account loan(you withdraw money from your retirement account as a loan, and then pay it back over time), those payments may continue during your Chapter 13 repayment period. This confirms with how other bankruptcy courts across the nation treat this issue.
Source: nolo.com
What Is a Chapter 13 Bankruptcy?
The answer is a Chapter 13 filing, also known as “reorganization.” In this filing the debtor submits a plan showing how the debtor will pay off some of their past due and current debts. The debtor is able to keep most of their property. In a plan filed with the court and approved by the trustee, the debtor will have three to five years to catch up on delinquent accounts. Chapter 13 is convenient for the debtor: they make one monthly payment to the trustee, who distributes the money directly to the creditors. If a debtor is considering a Chapter 13 filing, they need to be aware of the individual filing guidelines. An individual debtor can file if their unsecured debts are below $360,475, and secured debts are less than $1,081,400.
Source: lakelandlawyers.net