Chapter 13 – Debt Reorganization in Michigan
Use Chapter 13 to Save Your Property and Income in Traverse City
People are surprised to find out about their Chapter 13 option. Unlike a Chapter 7, many people “rewrite” contracts for vehicles, tools, mobile homes and business equipment. Instead of giving up your home, a Chapter 13 plan could allow you to keep it, despite a delinquency. Even better, many homeowner can discharge their second mortgages or equity loans. While the Chapter 13 plan requires a 36 – 60 month commitment, the financial benefit is worth it. For a detailed analysis of how a Chapter 13 can help you, contact Attorney Fragel for a free phone consultation.
Reasons for Filing Chapter 13
- Mortgage payments can be brought current.
- Stop foreclosure sales (Sheriff’s Sale).
- Cancel Second Mortgages – equity loans.
- Vehicle and mobile home payments can be lowered.
- If your income is too high for a Chapter 7, you qualify for a Chapter 13.
- Pay state and federal taxes back without penalties.
Advantages to a Chapter 13
Mortgage Foreclosures and Sheriff’s Sales are Stopped
These are stopped, and you keep your home, if the bankruptcy is filed any time before the sheriff’s sale (i.e. the foreclosure publication date). The past due payments are then paid over a period of up to 60 months. By the end of your plan, your mortgage is current, and any increase in value and equity is yours to keep. You never lose possession of your home unless you chose to do so.
Discharge Your Second Mortgage
If your first mortgage balance is higher than the value of your home, then the second mortgage can be discharged in a Chapter 13. By eliminating the second mortgage payment, it is possible for many Debtors to keep their home where they would otherwise be unable to afford it.
Vehicle Repossessions are Stopped
If the bankruptcy is filed anytime before the repossession, the Court issues an Ordered prohibiting, or making it illegal to repossess your property. If you maintain your Chapter 13 payments, the Order stays in effect, and you keep your property.
The Court issues an Order which makes it illegal for creditors to garnish your wages or bank account. By stopping the wage garnishment, you free up money to pay mortgages and vehicle payments in a Chapter 13 plan.
Reduced Car or Manufactured Home Payments
In Chapter 13, your pay the Creditor only the value of the vehicle or manufactured home. The interest rate is also lowered. For example, let’s say you owe $15,000 on a vehicle worth $5,000. Your monthly payment is $450 and your interest rate is 9.0 APR. You would keep the vehicle, pay the creditor $5,000 at 5% APR at $149.00 per month for 36 months. Once the $5,000 is paid, the creditor must release their lien.
Reduce Equipment or Tool Loans
Instead of paying the full contract balance, you pay only the value of the tools or equipment, plus a reasonable interest rate. If these payments are made as promised, then you own the property at the end of your Chapter 13 plan.
Protect the Co-Signer
If a valued friend or relative is a co-signer, the Chapter 13 will protect them from creditor harassment.
Patrick has been a Bankruptcy Lawyer in Traverse City and the surrounding areas for more than 20 years. You can rely on his knowledge of the Bankruptcy law to protect your property and income. If you are considering Chapter 7 or Chapter 13 bankruptcy, call Patrick for straight answers.