chapter 13

Chapter 13 plans have a very high completion rate when debtors agree to pay using a wage deduction order. Payment is more likely when deducted from your paycheck as opposed to having to discipline yourself to give the Chapter 13 payment priority over other household expenses. 

As Adam noted in his kind post, the New York Times today featured our study, "Race, Attorney Influence, and Bankruptcy Chapter Choice." My co-authors are Credit Slips blogger Jean Braucher, a law professor at the University of Arizona, and Dov Cohen, a professor at the University of Illinois who holds a cross appointment in psychology and law. And, we all express many thanks to the NYT reporter, Tara Siegel Bernard, who spent a lot of time slogging through the statistics and legal intricacies in our study.

Most people are optimistic about their future including most of my clients who file Chapter 13 bankruptcy. People believe, or hope, that bankruptcy’s protection will lead them to increase their future salary or business profits. A common question is whether a Chapter 13 debtor’s increased future income will make their Chapter 13 plan payment increase.

Chapter 13 debtors can cram-down mortgages on investment property to the amount of the property’s fair market value. People considering Chapter 13 to remedy upside down investment properties often ask how the cram-down works. Their questions cover issues such as when the cram down is final, does Chapter 13 affect their interest rate, and how does Chapter 13 cram-down deal with arrearage of past due payment on the investment property mortgage.

Here are some general answers to these common cram-down questions.