A chapter 13 bankruptcy case involves consumers, who have a steady flow of income, and who need to reorganize their financial commitments.\u00a0 Chapter 13 is labeled a consumer reorganization, because it involves a restructuring of the debtor\u2019s financial commitments.<\/p>\n
In a chapter 13, for example, a debtor\u2019s debt balances, interest rates, and monthly payments can be reduced.\u00a0 The debts can be consolidated into one monthly payment.\u00a0 However, the terms of a mortgage upon the debtor\u2019s primary residence cannot be modified.\u00a0 A reorganization under chapter 13 is good for the entire family as it places the debtors in a better financial condition than before the reorganization.<\/p>\n
The following is an example of a chapter 13 plan:\u00a0 A married couple with one child has $75,000 in total gross household income.\u00a0 The couple owes $15,000 on car #1 with payments of $375 per month, and $18,000 on car #2 with payments of $425 per month.\u00a0 The couple owes $60,000 in credit card debt with an average interest rate of 9.9%.\u00a0 One spouse had surgery, and the medical bills total $12,000.\u00a0 Additionally, the couple has fallen three months behind on their $1,000 per month mortgage payments, due to missed time and income at work due the surgery.\u00a0 The mortgage company is threatening foreclosure.\u00a0 The total monthly payments toward the credit card debt is $642 per month, which due to interest would take 15 years to pay off.\u00a0 The hospital is demanding payments of $200 per month for its debt.<\/p>\n
This couples\u2019 chapter 13 plan would propose the following: A reduction of payments for car #1 to $295 per month, and for car #2 to $350 per month.\u00a0 The $3,000 in missed mortgage payments would be paid at $100 per month with future mortgage payments to be paid under the normal terms of the contract.\u00a0 (Note: Although, I stated that those terms cannot be modified in chapter 13, the arrearage can be).\u00a0 $7,800 would be paid toward the credit card debt with $1,560 paid toward the medical bills with no interest to either.\u00a0 These amounts would be paid by the debtors at $945 per month for 60 months, which is the maximum time allowed for repayment in a chapter 13.\u00a0 The debtors will forward the $945 each month to their assigned chapter 13 trustee, who will escrow the funds, and pay creditors according to the terms of the chapter 13 repayment plan their lawyer will have prepared, such as that above.\u00a0 All of the above debt not paid is discharged (i.e. forgiven) forever.\u00a0 The debtors must successfully complete their plan, and no creditor will ever be able to demand payments other than as stated in the plan.<\/p>\n
If you or someone you know is ever faced with the issue, please seek advice from The Cooper Law Firm.<\/p>\n","protected":false},"excerpt":{"rendered":"
A chapter 13 bankruptcy case involves consumers, who have a steady flow of income, and who need to reorganize their financial commitments.\u00a0 Chapter 13 is labeled a consumer reorganization, because it involves a restructuring of the debtor\u2019s financial commitments. In a chapter 13, for example, a debtor\u2019s debt balances, interest rates, and monthly payments can… Continue reading Bankruptcy Relief with a Chapter 13 Filing<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/posts\/25"}],"collection":[{"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/comments?post=25"}],"version-history":[{"count":1,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/posts\/25\/revisions"}],"predecessor-version":[{"id":26,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/posts\/25\/revisions\/26"}],"wp:attachment":[{"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/media?parent=25"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/categories?post=25"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thecooperlawfirm.com\/blog\/wp-json\/wp\/v2\/tags?post=25"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}