People fall behind on their mortgages for all kinds of reasons: illness, lost job, pay cuts, or too much debt. You don’t want to lose your house. Chapter 13 can help. Chapter 13 offers affordable repayment plans that allow you to keep your house and repay other creditors at reduced rates. Some of the advantages of a chapter 13.
- You can keep your house and take care of the missed payments.
- Depending on your case, you make payments for 3-5 years – many people qualify for just three years – and you make a minimum repayment to all your other creditors.
- You know exactly what your monthly payments will be.
- All of your creditors have to participate.
- You pay most of your attorney’s fees through the plan.
How does a chapter 13 work?
- A chapter 13 is very simple for the client. We will establish a monthly payment for you, called the “plan payment.”
- The plan payment is based on what you can afford. It is based on your income and your expenses.
- Each month the chapter 13 trustee will divide the plan payment up among all of your creditors.
- Your creditors are required by law to accept the plan payment and cannot ask for anything more. This means that you don’t have to worry about creditors getting paid on time or getting paid the right amount.
- Once you make the payment, everything is taken care of for you.
You pay less per month in a chapter 13 than you would if you tried to repay all your creditors on your own.
- Your monthly plan payments and the length of the plan vary based on your income and your expenses.
- When you are in chapter 13 you are only paying your monthly expenses like your mortgage, car payments, food, clothing, utilities, phone, cable, insurance, charitable contributions, and recreation expenses, plus the plan payment. That is it. You don’t have to make any additional payments to any other creditors.
Attorney’s Fees
One of the advantages of a chapter 13 is that most of your attorney fees are paid through your plan. In addition, I understand that you are going through tough times financially and don’t have a lot of spare cash, and so I can show you ways to afford the upfront costs.
How is this different from debt consolidation and debt settlement programs?
There are a lot of differences, but the most important one to you is that in a chapter 13 bankruptcy federal law requires your creditors to participate. This is because bankruptcy laws are created by Congress and overseen by the federal courts. In a debt consolidation/settlement program, your creditors get to decide if they want to participate.
If your creditors decide not to participate with the consolidation/settlement program, then you might find yourself still owing thousands of dollars in debt. The bottom line is that when you start a debt consolidation or debt repayments program, you have no way of knowing whether your debts will actually be taken care of. When you start a chapter 13 bankruptcy, you will know exactly what will happen and if a creditor misbehaves, then they have to explain themselves to a federal judge. Finally, in most cases it costs less to do a chapter 13 than it does for a debt consolidation.
Contact the Law Office of David H. Fuller, a Seattle bankruptcy attorney, for your free consultation.
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