Chapter 13 Bankruptcy as Foreclosure Defense
A chapter 13 bankruptcy is one form of protection under the US Code that creates some unique situations for homeowners in foreclosure lawsuits. It can be the difference between drowning in debt, and losing your home, and reaching resolution with your creditors, but there are some sacrifices that you may have to make. Additionally, in certain circumstances, a chapter 13 bankruptcy could be potentially the only way for a homeowner to save their home from foreclosure.
What is a Chapter 13 Bankruptcy?
First, having to file a chapter 13 bankruptcy is generally because of the filers income. Generally, higher income families and households fit into this category because their income is simply too high and does not allow them to fit into a chapter 7 bankruptcy. A chapter 13 bankruptcy is a reorganization of all of your debts into a repayment plan. This plan typically lasts three to five years and consists of payments to your unsecured creditors by making one payment to your bankruptcy trustee. This payment is paid directly to a chapter 13 bankruptcy trustee – an individual that represents all of your creditors that are on your chapter 13 bankruptcy petition. This petition is meant to capture all of your creditors, and those creditors, in turn, take a cut of the payment to the trustee. After all plan payments are made, you receive a discharge of any unpaid debts. Sounds simple, right?
Do I need an Attorney to file a Chapter 13 Bankruptcy?
A chapter 13 bankruptcy is incredibly complicated. It involves a very complicated equation regarding your gross income. See, a chapter 13 plan payment is based on your disposable monthly income (“DMI”). The DMI payment is the payment that a trustee will argue the creditors are entitled to as a result of your bankruptcy filing. This DMI is then put into a proposed chapter 13 bankruptcy plan. Once the plan has been proposed, it has to be confirmed. This is where the trustee really plays a role in your bankruptcy filing – they often don’t want your plan to be confirmed. Why? It will be their position that the creditors are not paid enough with your proposed plan. This is where an attorney can be invaluable to your case!
Will bankruptcy stop my Florida Foreclosure Suit?
If you are in an active foreclosure, odds are that you face significant arrearages. One benefit in a chapter 13 bankruptcy is that you are able to pay those arrearages – and your monthly payments – to the trustee and make your mortgage current by the end of the bankruptcy plan. There are issues with this, namely in catching up your arrearages and trying to stop the foreclosure through bankruptcy your plan payment could be quite high. It is important to carefully weigh the payments to make sure you have a viable bankruptcy plan and not merely one that sets you up for a dismissed bankruptcy case and an active, and often times expedited, foreclosure case.
Free bankruptcy consultation!
I offer free chapter 13 bankruptcy consultations. To set up your free chapter 13 consultation, you must call my office at 813.502.6768. You can also e-mail me, but those requests take longer to process. The free consultation gives you a 30 – 60 minute time to discuss your options and find out more about chapter 13 bankruptcy and the impact it may have on your foreclosure lawsuit.