Bankruptcy: Chapter 13
Is Chapter 13 the right type of bankruptcy for you?
Chapter 13 bankruptcy is known as reorganization bankruptcy. It is a perfect opportunity for you to try to keep your home and vehicles if you are behind in your payments. Many people mistakenly believe that you are required to pay back all of your debts in chapter 13. That is definitely not the case. In fact, many Chapter 13 filers only pay a few cents on the dollar to their unsecured creditors (credit cards, medical bills, personal loans, repo deficiencies, surrendered mortgages, and other dischargeable debts). Chapter 13 allows you to restructure your debt and make it affordable based upon your income and reasonably necessary living expenses.
Please contact VanderBroek Law PLLC to schedule a free initial consultation to see how Chapter 13 Bankruptcy would affect you.
How is my Mortgage treated in Chapter 13 Bankruptcy?
Current Mortgage Payments – When filing a Chapter 13 Bankruptcy in Ottawa or Muskegon County, Michigan and elsewhere, you are required to pay your mortgage payments inside the chapter 13 plan. It is not possible to modify the interest rate by filing bankruptcy. A few clients have be3en successful at modifying their mortgages during the bankruptcy and getting their variable interest rates lowered to a nice fixed rate and lower mortgage payments.
Past Due Mortgage Payments – The past due mortgage payments are paid in full inside the plan with 0% interest over a period of 3 to 5 years. After the plan is completed, you should be current with your mortgage payments. At the end of the case, the trustee will actually file a notice with the court advising your mortgage company that your loan should be current. If the mortgage company fails to reply, it is prevented from getting any more fees and expenses from you and your mortgage is deemed current. Once the case is over, you will resume making your regular monthly mortgage payment directly to the mortgage company.
Once the plan is completed – Once you complete the plan, you will be responsible for making the mortgage payment directly to the mortgage company again.