Chapter 13 bankruptcy
Chapter 13: a three-to-five-year plan to catch up
Chapter 13 is for people with steady income who are behind on a house or a car, or who earn too much for Chapter 7. You repay what you can over three to five years under a plan the court approves.
How a plan works
You make one monthly payment to a trustee, who pays your creditors in an order the law sets. Missed mortgage or car payments are spread across the plan. Card companies and other unsecured creditors often receive a small share, and what remains of those debts is discharged when you finish.
Stopping a foreclosure sale
Filing stops a scheduled sale, even the day before it. The plan then pays the missed payments over time while you keep making the regular ones. That only works if your income can carry both, so we test the budget honestly before anything is filed.
When it is the better choice
Chapter 13 can also stop interest on some debts, remove a second mortgage that no equity supports, and protect a co-signer. It suits people who have something to protect and the income to protect it.
Five years is a long time. Plan for the bad months.
Plans that fail usually fail in year three, when a car breaks down or hours get cut. I leave some room in your budget from the start, and if your income changes, I ask the court to modify the plan rather than let it collapse.
What people ask about a plan
What if I miss a plan payment?
Call me the same week. One late payment can usually be made up, and a longer problem can often be handled by changing the plan.
Do I still pay my mortgage directly?
Usually yes. Your regular payment goes to the lender as before, and the missed ones are caught up through the plan.
Can I finish early?
Sometimes, by paying the remaining balance in full. Whether that saves money depends on your plan, so ask before you do it.
Find out what your plan payment would be
We can rough out the monthly figure in a first conversation, with your pay stubs and mortgage statement in front of us.