CHAPTER 13 BANKRUPTCY

Lower & Restructure Your Debts

Seattle Bankruptcy Attorneys

Call (206) 922-8501 for a Free Case Evaluation

Seattle Bankruptcy Attorney David M. Lux

The primary goal of a Chapter 13 bankruptcy is to consolidate your debts and set up a manageable monthly payment. Chapter 13 bankruptcies are often referred to as a "Debt Consolidation", or the "Wage Earners Plan." A Chapter 13 bankruptcy is filed to: Stop Foreclosures and Repossessions Where the debtor is behind and wishes to catch up on home mortgage payments and/or car loans, Chapter 13 bankruptcy can spread out your delinquency and help you catch up to keep your home and car.  In the meantime, by filing Chapter 13 bankruptcy, your scheduled foreclosure sale is cancelled and any car repossession action is stopped. Questions about bankruptcy? First Name: Last Name: Phone: Email: Question: Enter the security code above*

Catch Up on Your Mortgage Payments

If you are behind on your mortgage(s) and can now resume the regular mortgage payments, Chapter 13 restructure the amount you are behind on your mortgage(s) for up to a 5 year repayment plan.

Discharging Second Mortgages

In some cases, Chapter 13 bankruptcy can get rid of your second mortgage.  If you have a certified home appraiser assess the current value of your home at less than the balance of your first mortgage, you can petition a bankruptcy judge to strip the second mortgage from your home and have it considered general, dischargeable, unsecured debt, just as if it is now a credit card debt or medical bill.

Restructure/Lower Payments on Certain Non-Dischargeable Debts

Debtors can restructure their payments for car loans and even lower the car loan balance to the fair market value of the vehicle (if the car loan originated least 2 1/2 years ago).  Chapter 13 bankruptcy can also restructure back child support, student loans, delinquent taxes and certain other non-dischargeable debts.

Wipe Out as Much Unsecured Debt as Possible (in some cases, over 90%) Where the Debtor is Not Eligible for Chapter 7 Bankruptcy Under the New Bankruptcy Laws 

In a Chapter 13, a debtor must repay a portion of the delinquent unsecured debts over time in exchange for a discharge of any remaining unpaid debt at the conclusion of the repayment plan.

Other Important Characteristics of a Chapter 13 Bankruptcy Include:

Chapter 13 Payment Plan

In a Chapter 13 bankruptcy, you are required to make monthly payments to a trustee for up to 60 months. The first payment is due 30 days from the date your case is filed. Depending upon the type of debts you are including in the Chapter 13 plan, you may be making payments for little as 12 months, at which time you would have completed all obligated payments in your Chapter 13 bankruptcy, and your case will be completed. The amount, length of time, and structure of these payments are complicated and depends primarily upon the type(s) of your debts, your monthly income, and your monthly expenses. During a consultation with our office, we will advise you of all the details of your Chapter 13 payment plan if you so choose to file.

Keeping Exempt Property

As with filing a Chapter 7 bankruptcy, unless you have assets of significant value and/or with significant equity, most people keep all of their property in a Chapter 13 bankruptcy.  If you own a home with no more than $125,000 of equity, have furniture and household goods of average value and are willing to keep up your car payment(s), you will most likely keep all of your personal property. Retirement accounts (401k, IRA, etc.) are also exempt property you would retain during the Chapter 13 bankruptcy.

Automatic Stay

As with filing a Chapter 13 bankruptcy, after you sign the Chapter 13 petition, payment plan and schedules prepared for you by us, we will electronically file all documents with the clerk of the United States bankruptcy court. Immediately upon filing, a protection order is entered by the court to protect you from all creditor action. The bankruptcy court orders all creditors to stop all harassing phone calls, lawsuits, threats, judgments, repossessions, and garnishments.This protection order is known as the "Automatic Stay."

A Chapter 13 is often preferable for homeowners who are in arrears on their house payments and are facing a foreclosure. Under Chapter 13, the debtor has up to 60 months to cure an arrearage so long as the current mortgage payments are being made. Also, the debtor may have an opportunity to market and sell the residence rather than lose the homestead equity in the house to a foreclosure.

For a free phone consultation, call (206) 922-8501 to speak with one of our experienced Washington State Chapter 13 bankruptcy lawyers.