Chapter 13 Bankruptcy

Chapter 13 reorganization bankruptcy provides an opportunity for individuals to reorganize or adjust their debt under a chapter 13 bankruptcy plan. This includes secured debt (such as mortgages and car loans)  and unsecured debt (such as credit cards and personal loans). The chapter 13 bankruptcy plan is formulated to address a person’s own individual financial problems.

Saving Homes from Foreclosure – Chapter 13 bankruptcy is often used to save a home from a mortgage foreclosure.  A chapter 13 bankruptcy plan may generally be used to catch a mortgage up-to-date over a period of up to five years. Wholly underwater second mortgages may be wiped out.

Saving Cars from Repossession – Car loans may be restructured under a chapter 13 bankruptcy plan over a period of up to five years. If the car loan is over 910 days old (2 1/2 years), the payoff of the loan may be reduced.

IRS taxes may be provided for under a chapter 13 bankruptcy plan. Taxes generally fall into three categories:
1. secured, 2. priority, and 3. general unsecured taxes.

Credit cards, personal loans, and other general unsecured debt – may be provided for under a chapter 13 bankruptcy plan. The amount required to be paid to general unsecured creditors depends on various factors, such as one’s projected disposable income and amount of non-exempt property.