Palatine Bankruptcy Attorney Shows The Need For Chapter 13

Often times Chapter 13 is the proper Chapter for someone to file under the United States Bankruptcy Code states Palatine bankruptcy attorney.  If you are someone who is trying to save a home that’s in foreclosure or if you are behind on your mortgage and you just can’t catch up, Chapter 13 provides you that opportunity to do just that.  

Chapter 13 is debt reorganization through a Chapter 13 trustee.  In a Chapter 13 case, the entire amount of your mortgage arrears is put into a pot.  If you have a financed vehicle, the total amount to pay off that financed vehicle is put into the pot.  All of your other debt from any other source, student loans, taxes, child support, credit card bills, medical bills, personal loans, past due utilities go into this pot.  You make a monthly payment to a Chapter 13 trustee and the trustee, like a dealer in poker, divvies out a little bit to each of your creditors over the next 3 to 5 years.  The end goal in a Chapter 13 bankruptcy case is that your mortgage will be reinstated, your vehicle will be paid off and your unsecured creditors will be paid either all or a percentage of the amount that you owed and the remainder is eliminated. 

Chapter 13 requires that you have steady income.  Now, this income could be from the source of on employment, workers compensation, a job, Social Security, rental income or any other steady income; that what is required under the Bankruptcy Code to satisfy Chapter 13 requirements. 

In addition to having steady income, you have to have the ability to make your regular mortgage payment going forward outside of the bankruptcy plan.  So if someone is trying to save a home, they are going to have two main payments per month.  The first payment is going to be the trustee payment which takes care of the arrearage portion of the debt.  The second payment is the regular outstanding mortgage payment going forward each month. 

Now, in the event that you file a Chapter 13 and then you fall behind on either your outstanding mortgage payment going forward or on the Chapter 13 trustee payment, then one of two things is going to happen.  One, the trustee is going to bring a Motion to Dismiss your case for failure to make proper plan payments.  Two, your mortgage company is going to come in on a Motion to Modify the Automatic Stay and ask for permission to proceed against your property by way of foreclosure or otherwise avoid the bankruptcy protection. 

Your attorney will help advise you and devise a plan that will provide either all or a portion of the debt to be paid over the next 3 to 5 years.  The amount that you have to pay is dependent upon your income, your expenses and your total debt.