What You Need to Know About Chapter 13
Detroit Chapter 13 Attorneys with Over 33 Years of Combined Experience
If you are considering filing
Chapter 13, you are going to want to familiarize yourself with the chapter before
getting started. From allowing debtors to save a home from being foreclosed
upon, to allowing debtors to consolidate their debt into one affordable
payment, Chapter 13 has many advantages.
At the Law Offices of Marshall D. Schultz, we want to give you all of the
necessary information to help you determine if Chapter 13 is best for
over 33 years of collective experience handling
Chapter 7 and Chapter 13 bankruptcies, you can be confident that your case is in
very good hands.
Why come to us for bankruptcy assistance?
- We offer FREE case evaluations
- We have helped over 10,000 individuals find debt relief
- We have a positive rating from Avvo
- We have two convenient locations in Detroit & Southfield
We have compiled some important information about Chapter 13 bankruptcy.
We encourage you to continue reading and to learn more, please contact
Why Chapter 13 is better for some people. Some debtors own a home and don't want to lose it. Unlike a Chapter
7, a Chapter 13 allows debtors to save their homes from
foreclosure. With this chapter, debtors can stop foreclosure and cure their delinquent
mortgage payments over 3 to 5 years.
You have to meet these requirements to file. To be eligible to file a Chapter 13, your unsecured debts must meet a certain
minimum, but not be above a certain amount.
How are Chapter 7 and 13 different? A Chapter 13 is more complex than a Chapter 7. While a Chapter 7 is reserved
for individuals with a low income, Chapter 13 is known as the "wage
earners" bankruptcy. With a Chapter 13, the debtor pays off a portion
or all of their debts over 3 to 5 years, whereas with a Chapter 7, qualifying
unsecured debts are "wiped out."
What does the automatic stay do? Once you file for bankruptcy, the "automatic stay" immediately goes into effect. The automatic stay stops all collection
activity dead in its tracks. This means that creditors aren't allowed
to call you, mail you letters, continue a foreclosure action, or file
When you have substantial back taxes. Do you have substantial back taxes? A Chapter 13 allows you to pay them
off over 3 to 5 years rather than paying them all off at once.
How Chapter 13 treats first mortgages. Under the Chapter 13 laws, you must pay the mortgage on your primary residence
and it cannot be modified. However, a Chapter 13 does allow you to make
up the arrearages over the course of your plan. In such cases, your plan
will likely include your normal monthly payment along with the amount
needed each month to pay off your past-due balance.
Advantages of lien-stripping. If your first mortgage is upside-down and you have a second mortgage, a
Chapter 13 may allow you to eliminate the second mortgage through what
is called "lien stripping." If the house is worth less than
your first mortgage, the court could convert your second mortgage into
unsecured debt. While you may have to pay some of your second mortgage
through the plan, it will be treated the same as other unsecured debt
such as a credit card.
Car loans become more affordable. Your auto loan will be treated in one or two ways depending upon the age
of the loan. If the loan is 2.5 years or less, you can reduce the interest
to 5.25% and stretch the payments over the life of the repayment plan.
If your loan is older than 2.5 years, the loan can be reduced to the actual
value of the car and you can pay that amount through the plan. For instance,
if your loan balance is $20,000, but your car is worth $15,000, you would
only need to pay the $15,000 (the value of the vehicle).
Schedule your free case evaluation today!
Are you interested in learning more about the advantages of filing a Chapter
Contact our office today to schedule a free consultation with one of our Detroit bankruptcy lawyers!