Chapter 13
Chapter 13 Bankruptcy Options
If you do not qualify for a loan modification, Chapter 13 bankruptcy may be an option for you.
Basically, in circumstances where you have fallen behind on your mortgage payments or have assets that you could possibly lose by filing Chapter 7 bankruptcy, you may be able to protect your property and obtain relief from your debts relief by filing for a Chapter 13 bankruptcy. A Chapter 13 bankruptcy stops foreclosure and, under certain circumstances, allows you to restructure your debt into a payment plan that you can afford.
Chapter 13 bankruptcy is essentially a debt repayment plan. Nevertheless, a Chapter 13 bankruptcy is very different from the other types of debt consolidation plans which you may have heard about. At the New York law offices of Rosario G. Sicuranza, we offer a free initial Chapter 13 consultation to explain the difference between Chapter 13 bankruptcy and other types of debt relief.
If you own your own home or other assets and have a steady paycheck or have disposable income (and don't qualify for Chapter 7 bankruptcy), a Chapter 13 bankruptcy may be an option for you.
The Difference Between A Chapter 13 And A Debt Consolidation Plan
With a debt consolidation plan, you are basically forced to take the deal that the creditors offer you. In, fact, if one creditor doesn't agree to the plan, you could still be in jeopardy of home foreclosure, repossessions, garnishment of your wages, and other unpleasant outcomes.
However, when you file a Chapter 13 bankruptcy, you have the power of the federal bankruptcy laws behind you. In this regard, if you file a plan that is acceptable to the court, the creditors have to accept your terms. Additionally, in this instance, the interest on your debts no longer accrues.
How A Chapter 13 Payment Works Out In Terms Of The Amount Of Debts Do You Will Have To Pay Back
With a Chapter 13 payment plan, we will assist you in proposing a plan to pay back a percentage of your debt over a period of time ranging from three to five years. At the end of that specified period, any remaining debts which you may have will be discharged.
Specifically, with a Chapter 13 payment plan, secured debts like home mortgages and car loans must be fully paid. Additionally, unsecured debts such as credit card and hospital bills, will be paid back in an amount equal to your net equity after taking various exemptions into account. The exact percentage of what you will be obligated to pay back will be dependent on your disposable income and the value of your assets after taking statutory exemptions into account. Additionally, under certain circumstances, you may also be able to pay off certain tax debts to the IRS in a Chapter 13 bankruptcy plan.
If during the course of you plan repayment, you lose your job, you may be able to convert your Chapter 13 payment plan into a Chapter 7 bankruptcy in order obtain relatively immediate debt relief.
For more information concerning Chapter 13 relief please contact our office for a no-cost evaluation of your Chapter 13 case.
LOSS MITIGATION
What Is The Loss Mitigation Program?
If you are a homeowner struggling with a mortgage payment, some Bankruptcy Courts have a new program called Loss Mitigation Program which encourages debtors and their lenders to get together and find a solution such as loan modification, loan refinance, forbearance, short sale, etc.
The Loss Mitigation Program acts as a forum for debtors (members of the public) and lenders to try to reach a mutual agreement when the debtor's property is at risk of foreclosure. In this regard, "property" means real estate or cooperative apartment used as a principle residence of the debtor.
Under this program, bankruptcy deadlines (while inside a bankruptcy case) are set further back in time to prevent interference with the negotiations. The Loss Mitigation Program works to encourage both parties to reach agreements under the protection of the Bankruptcy Court. This program is currently only available for those [debtors] in bankruptcy, whether is it Chapter 7, 13 or 11.
The Bankruptcy Court Describes It:
"The Loss Mitigation Program was developed by a committee of judges and lawyers, including representatives of lenders, debtors, and trustees, as part of the Court’s district-wide strategic planning process over the course of the last year. It represents an effort to respond to the challenging economic times and, in particular, the large numbers of mortgage defaults and foreclosures in the District, by creating an additional tool for homeowners and mortgage lenders to explore their options and reach mutually beneficial agreements, including where appropriate, mortgage modifications."
What Is Covered By The Term "Loss Mitigation"?
The following solutions are covered by the Loss Mitigation Program in order to avert foreclosure or increased costs to lenders. The following are some of the agreements that Loss Mitigation Program covers:
- Loan Modifications;
- Loan refinancing;
- Forbearance;
- Short Sales;
- Surrender of Property in Full Satisfaction.
How You Can Become Eligible For The Loss Mitigation Program?
- Under Section "C" of the Chapter 13 Bankruptcy Petition debtors may express an interest in discussing loss mitigation with a particular creditor. If within 21 days of filing the petition, the bankruptcy court may enter a loss mitigation order.
- In the other types of bankruptcies mentioned above, the debtor may request loss mitigation with a particular creditor. Under these circumstances, if the creditor does not object within 14 days, a loss mitigation order may be entered by the court.
How The Loss Mitigation Order Works
The Loss Mitigation Order will allow a creditor to contact a debtor or the debtor’s attorney directly, without violating the automatic stay so as to begin the loss mitigation process. In fact, loss mitigation sessions can be arranged either the debtor or the creditors within a time frame set by the bankruptcy court. This initial contact sets the framework for the negotiations. And, as a matter of convenience, Loss Mitigation Sessions can be conducted in person, by phone or by way of video conference. However, one of the requirements is that each party must have a person present with full authority to settle the debt.
Is It Possible That A Bankruptcy Can Be Dismissed By Successful Loss Mitigation?
If the bankruptcy court approves a settlement agreed by the parties, it can continue the bankruptcy process, or the debtor has the option of requesting that the bankruptcy be dismissed as part of the settlement. Where this happens, the bankruptcy court may approve the settlement as part of a "constructive dismissal", so long as this relief complies with the Bankruptcy Rules and Bankruptcy Code.
The Bankruptcy Option
Filing bankruptcy should be thought of as a last resort. Our office will counsel you about all of your options before having to file for Bankruptcy, such as negotiating with credit card companies and loan modifications. Hopefully, these options may solve your financial problems short of filing bankruptcy.
When you retain our law firm, we will discuss your options with you and help you get you peace of mind back.