Chapter 13 FAQs

 Chapter 13 Bankruptcy is a 36- to 60-month repayment plan. You may qualify for the minimum period if your income is below the state gross median. Usually you pay pennies on the dollar; the unpaid-for balance gets discharged (canceled) upon plan completion. Chapter 13 bankruptcy may reduce auto loan payments and (if the real property is severely depreciated) remove a second mortgage or equity line.

Category: Chapter 13 FAQs

You need a source of income or funds to afford monthly payments. Your total secured debt must be below $1,257,850; total unsecured debt must fall short of $419,275. If you file a chapter 13 bankruptcy within less than 4 (four) years after having filed a chapter 7 bankruptcy that concluded with discharge of debt, then you cannot receive a chapter 13 discharge.

Category: Chapter 13 FAQs

Yes. If you financed your car 910+ days (about 2½ years) before filing chapter 13 bankruptcy, then we can “cram down” your car loan. This means reducing the loan’s principal to the fair market value. Typically interest is paid at 4.25%. This is a unique benefit to chapter 13 bankruptcy, and is not applicable to chapter 7. If you financed your car more recently, you can extend your monthly payments up to 60 months from the present (the normal maximum length of a chapter 13 bankruptcy payment plan).

Category: Chapter 13 FAQs

If you’re behind on mortgage payments, but are presently able to resume payment on current dues, you can repay the arrears (the late payments) over up to 60 months with a chapter 13 payment plan. Chapter 13 bankruptcy filing will stay (stop) the foreclosure and give you time to confirm a repayment plan. 

Category: Chapter 13 FAQs

If the value of the real property has depreciated below the payoff on the primary mortgage, then the second mortgage can be “re-labeled” as  unsecured debt and “stripped” off in a chapter 13 bankruptcy. This type of motion was commonly filed after the last real estate crash, but the opportunity isn’t common in a strong housing market.

Category: Chapter 13 FAQs

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