In a Chapter 13 case you will file a repayment plan with the bankruptcy court to pay back all or a portion of your debt over time. The time period and the amount of your payment will depend on a number of factors. For example we look at your income over the last six months, your current income and future changes, the amount you are behind on any secured or priority debt (mortgage, auto, taxes) and the amount left over from your income after your allowable living expenses are deducted 
(national expense standards).

The most important thing about a Chapter 13 bankruptcy is that it allows you to keep your valuable property which might otherwise be lost. You must be able to make the payments on your secured items but any amounts you are behind prior to the date your bankruptcy is filed will go into your plan and be paid to the creditors by the Chapter 13 Trustee.

In a Chapter 13 bankruptcy a trustee administers the plan payments to your creditors out of the monthly plan payment you will send in. This payment is determined by many factors including the amount of money you owe to secured or priority creditors (mortgage auto, taxes) creditors and your disposable monthly income. In a Chapter 13 bankruptcy you will continue to make your normal monthly payments for living expenses, secured debt payments and instead of making payments on your credit cards you will make one payment (determined by your disposable income) to the Chapter 13 Trustee every month for the complete length of your plan.

In a Chapter 13 case if you have a second mortgage, judicial lien, or HELOC on your home you may be able to remove it (strip it) and have it treated as an unsecured creditor. This means that the mortgage or lien will be treated like your other unsecured creditors (credit cards) and they will be paid an amount (in full or a percentage of their debt) through the plan. You will not have to make any more payments directly to the second mortgage company. To be able to do this there are certain criteria that you must meet. First you must get an appraisal done on your house by a licensed appraiser. Your home must appraise for less than what you owe on your FIRST mortgage. If it does and you are not paying your creditors back 100% (dollar for dollar of what you owe) then it may be beneficial to strip the lien or mortgage. This is something that we will discuss with you at your free consultation to determine if this is the best option for you.All of the above is general information that may not be applicable to you and your situation. Please contact us for a free consultation to determine the best plan of action for you.