Chapter 13 Bankruptcy Survival Tips

Chapter 13 Bankruptcy Survival Tips

Filing for bankruptcy is not like dealing with another credit card company. Filing for this bankruptcy doesn't mean that you can just make a minimum payment, pay late and incur a late fee, or not pay at all. You'll actually have to submit your documents to the court and make the payments as agreed. And you have to pay on time every month without fail.

So Chapter 13 is likely the best choice for someone facing a foreclosure, but each individual has a different situation and the unique characteristics of the situation should be considered before making a final decision.

Work with your lawyer to develop a reasonable budget. One of the perks of having legal representation is that your lawyer can appeal to the bankruptcy court for a more realistic repayment plan if your current salary will not allow you to support reasonable cost of living expenses.

The reason some people may choose to file a Chapter 13 instead of a Chapter 7 is that they have a home with equity that exceeds the exemption amount. If they file for a Chapter 7 under that circumstance, they would lose their home. Therefore, they file for a Chapter 13 so that they can keep their home. You may also have to file for Chapter 13 if your income exceeds the allowable amount and/or you are behind in paying your secured debt (such as a mortgage). Chapter 13 is much more complicated, which is why you need an experienced attorney guiding you each step of the way.

Most of the time chapter 7 is the best case scenario, however there's also chapter 13. Chapter 13 should be used when there's a lot of equity in a house or some other kind of asset that a debtor is trying to protect. An example of this can often be seen when a person comes in with a house that has a lot of equity in it. Well, a way to protect this is for the debtor to file a chapter 13. If there's more than $15,000 or in a joint case bankruptcy more than $30,000 of equity, then a trustee may actually go after your house. By filing chapter 13 bankruptcy, the foreclosure process stops and the trustee doesn't seize your house for the purpose of using the equity within it to pay of your creditors. However, once Chapter 13 is filed the secured debt, home mortgage has to be paid in full, you have to be able to make the original payments in full. The big benefit of filling chapter 13 is that it allows you to stretch your arrears payments that you missed for your home mortgage over the period of the payment plan.