Chapter 13 Bankruptcy

Question:  Can a Chapter 13 bankruptcy save my house if it’s in foreclosure?

Answer:  Yes. The past due payments on his or her mortgage can be rolled into the bankruptcy repayment plan, which means the past due payments would be stretched over 3-5 years. The filing of the Chapter 13 bankruptcy will prevent the foreclosure from proceeding.

Question:  How much will my creditors be paid in a Chapter 13 bankruptcy?

Answer:  Many times, pennies on the dollar. The amount your creditors will get depends on the means test calculations that your attorney can do for he or she, as well as other factors.

Question:  How long is the typical repayment plan in a Chapter 13 bankruptcy?

Answer:  Typically 3-5 years.

Question:  What if I lose my job during the 3-5 years of the Chapter 13 Bankruptcy plan?

Answer:  If you cannot make his or her plan payments due to a decrease in income, the plan can be modified, the case can be converted to a Chapter 7 bankruptcy, or the case can be dismissed.

Question:  Will my tax debts or back child support be paid in the Chapter 13 bankruptcy plan?

Answer:  Yes. Actually, tax debts and support obligations are considered “priority debts” which means his or her are typically paid before non-priority unsecured debts like credit cards.

Question:  Can a second mortgage on my home be “stripped” in a Chapter 13 bankruptcy?

Answer:  Yes, as long as it is completely unsecured by any equity, an adversarial proceeding can be filed in the bankruptcy court to remove (“strip”) the lien that the second mortgage holder has on your home.

Question:  I owe much more than my car is worth. Will I still have to pay the full amount of the loan if I file Chapter 13 bankruptcy?

Answer:  If you purchased the car more than 910 days (approximately 2 ½ years) before you filed bankruptcy, the amount you pay can be “crammed down” to the value of the vehicle.

Question: I have a very expensive paid off car. Will the trustee take my car in a Chapter 13 case?

Answer:  No. Chapter 13 bankruptcy is not a liquidation. However, the payments that you make to unsecured creditors over the 3-5 year life of the plan must be at least as much as would have been liquidated in a Chapter 7 bankruptcy.

Question:  How many times do I have to go to court in a Chapter 13 bankruptcy case?

Answer:  In a typical Chapter 13 bankruptcy case, you will have a Meeting of Creditors (also called a 341 Meeting) and a hearing for the confirmation of the repayment plan.

Question:  If I file a Chapter 13 bankruptcy, and my spouse doesn’t, can the creditors still come after him or her if we have joint debts?

Answer:  No. There is a co-debtor stay in Chapter 13 bankruptcy on joint debts. This means the creditors cannot go after your spouse even though he or she didn’t file for bankruptcy, as long as the stay is in effect.

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