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Chapter 13

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Save Your House

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A person may file a Chapter 13 rather than a Chapter 7 bankruptcy for a variety of reason. Some prime examples are:

• A person may make too much money to qualify for Chapter 7 bankruptcy;

• A person may have too much non-exempt property that would be lost to the trustee in a Chapter 7 bankruptcy case;

• To pay off taxes that would not be discharged in a Chapter 7 bankruptcy;

• To stop a foreclosure sale and get caught up on mortgage payments;

• To strip off liens on real estate that are wholly unsecured.

Whatever the reasons, filing a Chapter 13 bankruptcy case can be a very complicated undertaking. Chapter 13 allows a person to reorganize their debt into a repayment plan that fits their budget and typically lasts three to five years. Rather than paying dozens of different creditors every month, you will send in a single payment to a court-appointed trustee, who then disburses payments to creditors. The monthly payment is your disposable income, which is your monthly income minus necessary living expenses.

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