Chapter 13 bankruptcy is reorganization through a Chapter 13 trustee. The reason why many people will file Chapter 13 is to save a home that has gone into foreclosure. Now, the reason why the home fell into foreclosure could be several; in many cases, someone has lost their job, fallen behind on their bills and now they are back employed. In other cases, someone has had an illness which caused them to lose work and now they have recovered from illness and are back gainfully employed. There are other situations such as divorce or straight job loss that can lead someone to fall behind on their bills and be in need of a Chapter 13.
The most common form of Chapter 13 or reason for a Chapter 13 is to save a home that went into foreclosure. If you fall behind on your mortgage and you don’t have the ability to catch up in one lump sum payment, the mortgage company won’t typically work with you. Under Chapter 13 bankruptcy law, you are allowed to make your current mortgage payment on time once again and put something towards the part you fell behind. The part you fell behind is known as an arrearage and you can repay that arrearage under Chapter 13 bankruptcy laws over a period of 3 to 5 years.
Now, at the same time you are repaying your mortgage arrears, you are able to reorganize the debt on a vehicle and provide for either all or a portion of unsecured debt such as credit cards, medical bills, personal loans and more.
Since Chapter 13 is complex, I strongly recommend that you meet with a qualified attorney who practices Chapter 13 consumer bankruptcy on a day to day basis. That attorney will be able to advise you as to how long your payment plan will approximately last and more importantly, how much will be required to pay per month under your reorganization plan.
