Examples of Chapter 13 Debt Scenarios From Shorewood Bankruptcy Lawy...

The main reason why someone would file Chapter 13 is either to reorganize mortgage arrears or to reorganize any other debt.  So they could have other debt, too, that they want to repay.  I want you to picture a big pot in the middle of a table.  Inside this pot we are going to put the total amount of mortgage arrears.  So in our example, $10,000 is going right in the pot.  Now remember, they still have the outstanding mortgage balance that they are making for the next whatever, 30 years on time.  That is not part of the pot.  That is a separate payment that they are going to make.  But the $10,000 in arrears goes into the pot.

If they have a financed auto vehicle, the total amount to pay off that vehicle goes into the pot.  I don’t care if it’s $20,000, $30,000, or whatever it is.  They might have just bought the car.  Whatever is owed financially, if it is a financed vehicle, goes into the pot.

If it is a leased vehicle, that’s separate.  Think of the leased vehicle as renting an apartment.  If the person wants to keep the apartment, if the person wants to keep the lease, they just have to keep making their regular payments.  You can’t really reorganize that.  Medical bills, credit cards, any other debt, student loans, tax debt, whatever they have goes in this pot.
 
Now, this obviously has a certain dollar amount.  The debtors, to make it work, may have to pay some of the creditors back at100%.  That would be mortgage arrears, child support, and recent tax debt.

More information regarding Chapter 13 is located at Shorewood Bankruptcy Lawyer or call (847) 520-8100.