Filing for Chapter 13 bankruptcy can feel like a huge step, especially when you are worried about losing your home. However, Chapter 13 is specifically designed to help individuals keep their property while reorganizing their debts. If you are facing foreclosure or struggling to keep up with mortgage payments, Chapter 13 might be the solution you need.
One of the biggest benefits of filing for Chapter 13 is the opportunity to stop foreclosure and catch up on missed mortgage payments. Once you file, an automatic stay is put into place. This means that creditors must stop collection efforts, including foreclosure actions. With Chapter 13, you can spread out your missed mortgage payments over three to five years as part of a court-approved repayment plan.
While you catch up on past-due payments, you must also stay current on your regular monthly mortgage payments to keep your home. Chapter 13 does not eliminate your mortgage but gives you time to catch up without the threat of immediate foreclosure.
In a Chapter 13 plan, you propose a repayment plan that outlines how you will pay off your debts over time. The plan is typically spread out over three to five years, and during this time, you make payments to a court-appointed trustee, who then distributes the funds to your creditors.
Your repayment plan will include both the missed mortgage payments and any other secured debts, such as car loans. As long as you adhere to the plan and make your regular payments, you will be able to keep your home and avoid foreclosure.
During Chapter 13 bankruptcy, you can sell your home, although you will need court approval to do so. If the sale is approved, the proceeds will first go toward paying off the mortgage, and any remaining funds might go toward other debts.
Filing for Chapter 13 bankruptcy offers powerful protections for homeowners. It can stop foreclosure, give you time to catch up on payments, and allow you to keep your home. If you are considering bankruptcy or want to learn more about how Chapter 13 can help, contact O’Brien Law Firm, LLC, for personalized legal advice.
The repayment term for Chapter 13 bankruptcy is three to five years. During that time, it is not uncommon for some people to experience changes in finances that interfere with their ability to stay current on their bankruptcy obligations.
Job loss, serious illness, death, and divorce are some of the many reasons why some people encounter difficulty making their bankruptcy payments. Fortunately, the law offers the following solutions for people who are unable to pay their Chapter 13 bankruptcy payments.
Chapter 13 bankruptcy allows eligible debtors to suspend payments for short-term financial emergencies. To qualify, trustee approval is necessary and the suspension term is three months or less.
Chapter 13 bankruptcy plan modification is an option for debtors who are experiencing a temporary setback in their ability to make on-time payments. The interruption must last longer than three months. Debtors must also maintain an income level that allows them to make ongoing Chapter 13 payments. Debtors who pursue dismissal do not retain the protection of the automatic stay and are subject to debt collection calls, wage garnishments and foreclosure or repossession.
Changes in income like job loss, hospitalization, etc., that cause long-term income loss or an inability to pay are generally not eligible for modification. There are also circumstantial limitations to bankruptcy plan modifications.
Depending on the cause of their current financial challenges and amount of income, debtors may not qualify for bankruptcy modification but qualify for Chapter 7 bankruptcy protection if their income passes the means test. Chapter 7 can help those experiencing long-term financial stress to start over when they are no longer able to meet Chapter 13 bankruptcy requirements.
Debt is a reality for millions of people living in Mississippi and across the country. According to the National Consumer Law Center and the Consumer Federal Protection Bureau, 70 million people nationwide interacted with a debt collector during the year 2017. One third of American adults had some type of debt in collections during 2016. It can be stressful for people who are struggling to pay their bills to have to speak with debt collection services, but there are some ways to make it easier.
First, it is important for the debtor to know his or her rights. Under the Fair Debt Collection Practices Act, creditors are prohibited from calling people outside of certain hours. They are also limited in the number of calls they can make and prohibited from harassing people. If a debt collector violates the FDCPA, there may be actionable claims for damages.
Second, it is important for people to verify that the debt collector is legitimate. There are a number of organizations in operation that are not the real owners of a debt but targeting people to scam them. It is simple to check the legitimacy of a debt collector with the Better Business Bureau or an online search.
Third, it is important to get the original paperwork associated with a particular debt. The contract that governs the debt can contain provisions that give a debtor rights, and it is generally necessary to show that a debt is legitimate.
People in Mississippi have options when it comes to dealing with debts and debt collectors. A lawyer may help people who are struggling to pay bills by suggesting avenues to reduce or eliminate debts, including filing for bankruptcy protection in some cases. A lawyer might be able to negotiate with creditors to reduce the amount of debts outstanding or arrange better payment terms.
At the end of 2018, Americans owed credit card companies roughly $900 billion. However, the Consumer Financial Protection Board says that Mississippi residents and others throughout the country aren’t necessarily in a perilous financial situation. Currently, most of the credit card debt is being generated by people who have credit scores of at least 740. This means that they are more likely to pay their debts in full and on time.
Furthermore, interest rates for other debts such as mortgages and credit cards are lower by historical standards. This makes it easier for debtors to handle their overall debt loads. Finally, unemployment is reportedly at its lowest level in 50 years, and employers are expected to spend more money on worker salaries in 2020. Consumer confidence is also relatively high despite the fact that the United States and China have been engaged in a long-term trade battle.
However, there are some reasons to believe that increasing credit card debt could eventually become a problem. For example, those with lower credit scores are accumulating debt at a relatively high rate, and this has led to an increase in both late payments and charge-offs over the past two years. The CFPB also says that debtors have been increasingly seeking out debt settlements and other forms of relief in recent years.
Those who are seeking a fresh financial start may be able to obtain it by filing for bankruptcy. Doing so might make it possible to eliminate credit card and other debt balances. An attorney may be able to help a person learn more about the process of filing. In many cases, individuals who file are entitled to an automatic stay of creditor contact. This may prevent creditors from going through with a foreclosure or repossession until a case has been resolved.
A person in Mississippi who has an open Chapter 13 bankruptcy may be able to get a vehicle loan, but there are several steps that must be taken to do this. Moving ahead without getting the approval of the court puts the bankruptcy itself in jeopardy. The person could also face a lawsuit from creditors, and the vehicle could be repossessed.
The first step is going to a dealership and talking to the special finance manager. If the manager agrees, the person can choose a car, and a sample buyer’s order is created. This form should include such information as the monthly payment, the interest rate and the maximum term. The form should say that the person will purchase this car or a similar one. The reason for this is that if the car sells before the process is complete with the court, the person would have to start the process all over again unless “or similar” is included on the form.
The next step is to take the form to the trustee. The trustee must agree that the person has a good reason for purchasing the vehicle and that it is within the debtor’s budget. The motion is sent to the court and creditors. If there are no objections, the person is allowed to proceed with the purchase.
As this process demonstrates, filing for bankruptcy does not mean a person is never able to take out a loan or build credit again. A bankruptcy filing can clear the way for a person to start fresh financially. A person who is struggling with debt may want to talk with an attorney about eligibility for a Chapter 13 bankruptcy. It is necessary to have an income above a certain level. The person must also be able to work out a repayment plan with creditors.
