Chapter 13 Bankruptcy: When Would Someone Want To File?

This video talks about under what circumstances someone would want to file for Chapter 13 bankruptcy.  Each case is different and each case needs the be evaluated to ensure that filing is going to accomplish the requested goal of financial relief.

David Siegel: When would somebody want to file a Chapter 13?

Jesse Barrientes: Well, to save a car or to save the house in arrears. We have a lot of mortgage issues going on. Sometimes people just need to kind to get a foothold on things. Maybe they haven’t been the best at managing their money and I find that there’s a lot of people – it really doesn’t matter. I’ve seen people that come in of all different types of income levels and have difficulty with. With the people that have more money, it’s just the bigger difficulty because they have been spending more. But a lot of times people, they’re in arrears, maybe they haven’t been able to pay for the past six months and so there’s no way they can pay current. But they can’t pay that mortgage arrears because maybe somebody got sick, maybe somebody broke a leg or had some type of employment situation, lost a job or changed jobs or switch – they just could be a whole bunch of different things. And the mortgage company won’t accept it when you’re behind. They are going to start to try to accelerate the loan and ask for everything so you can’t just okay, here, I will take this amount for my current mortgage and tact the other stuff someplace else. So a lot of times they won’t let you do that.

The same is true of the car. You need your car to go to work. You can’t go out there and buy a new car and so that will also once you file your Chapter 13, you will be able to kind of straighten that away, too, because that’s a secure debt and that creditor is going to be paid.

David Siegel: So in a nutshell, you are basically telling the mortgage company you’re going to get paid but you’re going to get paid through this reorganization and your auto, you are telling them, you are getting paid as well; maybe not the full amount but you are going to get paid under this plan of reorganization and therefore I get to keep both items as long as I follow through on my plan, is that correct?

Jesse Barrientes: That’s exactly right. So again, you could save your house or your car in distress.