Cicero Bankruptcy Lawyer Explains Chapter 13 Debt Relief

Chapter 13, bill consolidation through the court is similar to the bill consolidation that you see on TV, but the big difference is that this has a lot of strength just like Chapter 7 has a lot of strength.  There are two basic ways that we see Chapter 13′s.  The most common is when someone is trying to save a home that is in foreclosure or if they have fallen behind on their mortgage and they have an arrearage.  An Arrearage is the part that they fell behind on.  Chapter 13 will allow them to pay the arrearage back over the next 3 to 5 years and allow them to make the regular mortgage payment once again on time.

What usually happens by way of example is the following:  When somebody falls behind on their mortgage, it could be illness, injury, job loss, divorce; whatever the reason is, they fall behind.  And let’s say they fall behind $10,000.  Maybe five months at $2000 per month, they are down $10,000.  Well now they are back working or they have recovered from whatever illness or injury they had. They’re back on their feet, they are working and they can make not only their regular mortgage payment again, but they can really pay something back on the part they fell behind on to catch up.  And the mortgage company says okay, if you can make one lump sum payment of $10,000, we will call it even and you can start making your regular payment again.  But obviously the homeowner doesn’t have $10,000 to pay them, but they do have the ability to repay them $10,000 over the next 3 to 5 years.

So, what Chapter 13 allows them to do is it basically says to the mortgage company look, we’re going to keep our house.   We are going to pay you back and we’re going to make our regular mortgage payment again, and we’re going to pay you back over the next 3 to 5 years at a monthly payment that we can afford.  So, it really is a great way to save a home.

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