WHAT IS CHAPTER 13?
CHAPTER 13 is a court-reviewed and approved debt repayment plan. Generally, the plan will last from three (3) to five (5) years. In no case can it last longer than five (5) years. The law allows for certain loan agreements to be favorably modified for your benefit. Also, various unsecured debts (credit cards, medical bills, utility bills, lease deficiencies, etc.) can be legally satisfied for pennies on the dollar.
WHO CAN FILE CHAPTER 13?
The two (2) general requirements to participate in a Chapter 13 plan are a regular source of income and the ability to complete the repayment plan within 60 months. “Income” is considered to be wages, commissions, Social Security benefits, pension/retirement income, child/spousal support, or any other regular, on-going source of funding. Most people with regular income can develop a repayment plan that will complete within the required time frame. Each case is different, but an experienced debt counselor can assist you in putting together a plan that will save your property, and get you right back on track.
CAN I KEEP MY HOME, AUTO, AND OTHER PERSONAL PROPERTY?
The short answer is – Yes!! The goal and guiding principle of Chapter 13 is to give a person temporary relief from having to pay all creditors in full all at once. The aim is not to seize and liquidate your assets. So long as an acceptable plan of repayment is proposed, and the payments made on a timely basis, you will be able to keep your home and your assets.
HOW MUCH WILL MY MONTHLY PLAN PAYMENT BE?
Many people mistakenly believe that they will have to pay 100% of their debt in a Chapter 13 plan of reorganization. Clients are almost always pleasantly surprised to learn that Chapter 13 requires repayment of only that portion of the debt as you can reasonably afford!!! The amount of your monthly plan payment will depend on your particular situation. Generally, however, the Court will allow you to develop a budget to pay your regular, on-going household expenses from your net income. The amount left over will determine the amount of your monthly plan payment.
HOW DO I STOP CREDITORS FROM HARASSING ME?
The minute your case is filed, and the creditors notified of the filing, the law prevents any and all further creditor contact with you…period. This means an end to any pending lawsuit, wage garnishments, dunning letters, and those never-ending telephone calls. We will be able to handle all creditors as part of your representation. You will not have to deal with them ever again!
WILL CHAPTER 13 STOP MY FORECLOSURE ACTION?
Yes. Upon the filing of the case, the law requires that any foreclosure proceeding be immediately halted. So long as you can resume the regular monthly payments, and repay the past due amount within a five (5) year period, the mortgage company will have to live with your plan of repayment!!
WILL CHAPTER 13 STOP REPOSSESSION?
Yes. If the petition is filed prior to the seizure, the creditor will be prevented from repossessing the property. If the property has already been repossessed, but not yet sold at a liquidation sale, the filing of the petition for relief will usually stop the repossession process, and the creditor will immediately return the asset to you.
WILL I HAVE TO GO TO COURT?
Yes. Approximately thirty (30) days after the petition is filed, there will be a brief, informal hearing you will need to attend with your lawyer. At this hearing, a representative of the Chapter 13 Trustee’s Office will ask you a series of questions about your assets, income, budget and repayment plan. Also at this hearing, your first plan payment will be due. This starts the process of repayment of your creditors. Creditors may attend this hearing, but usually do not do so.
WILL CHAPTER 13 HURT MY CREDIT RATING?
Most people needing the benefits and protections provided by Chapter 13 already have a few dents in their credit history. Your mortgage and all other debts will be repaid on a timely basis by the local Chapter 13 Trustee. Thus, your on-time payment history will be put back on track. Once your case is concluded, the Trustee’s Office will assist with the correction of your credit report, and provide you with a listing of potential credit grantors who understand just what you have accomplished in completing your Chapter 13 plan of repayment!!