Chapter 13 Bankruptcy in Livonia & Metro Detroit
Chapter 13 bankruptcy is a “reorganization” bankruptcy rather than a complete liquidation of debt as in a Chapter 7.
A Chapter 13 is, basically, a payment plan enforced by the Federal Bankruptcy Court upon all of your creditors. In Chapter 13, you repay only what you can can afford to repay. Most people pay well under 100% of the debt amount owed.
One of the best features of a Chapter 13 is that it requires no negotiation with your creditors. Upon filing, an “Automatic Stay” court injunction clicks into play. This “Stay” prevents your creditors from harassing you for collection for the full length of your Chapter 13 process.
How Chapter 13 Bankruptcy Works
Immediately, upon filing, creditors must stop collections activity. Creditors instead file a “Proof of Claim” form with the Bankruptcy Court. If it contains bogus or inaccurate information, your Livonia bankruptcy attorney can object to it and seek its disallowance.
In your Chapter 13 Plan, creditors receive payments from the Chapter 13 Trustee in priority order, depending on the type of debt held. The Trustee pays Mortgage and other secured debts before credit card debts or medical debts, for example. Likewise, the Trustee pays non-dischargeable tax debts before back rent owed to a former landlord. And so on.
Further, in Chapter 13, you may also have the opportunity to restructure your debt. That is, to strip off and totally discharge under-secured second mortgages, cram down the secured debt owed for rental properties, modify interest rates, and pay non-dischargeable debts off over 60 months at 0% interest without fear of garnishment, property seizure, or foreclosure.
For 36-60 months, you make a monthly payment equivalent to your “net” household income (what you take home after allowable necessary household expenses). That payment is made not to your creditors but to the Chapter 13 Trustee assigned to your case by the Court.
Once you have completed all of the required payments, anything that you still owe to your creditors “on paper” is then discharged and need not be repaid at all.
Ever.
A Chapter 13 Bankruptcy is a complicated process, and it is essential that you retain an experienced bankruptcy attorney to assist you with it.
Reasons for Filing Chapter 13 Bankruptcy
- You can stop home foreclosures and repossessions upon filing.
- There is no liquidation of your personal assets in a Chapter 13.
- You can “stip off” (discharge) a second mortgage if the value of the home does not sufficiently secure it.
- You can “cram down” a secured debt to the value of its collateral in some cases.
- Pay off tax debt and other non-dischargeable debts over 60 months.
- You can dismiss it or convert it to Chapter 7 at any time.
- No tax liability for discharged debt.
- Freedom from debt collections and threats.
Noble Path Legal: Helping Livonia and Metro Detroit Residents in Chapter 13 Bankruptcy Since 2008!
Our attorney, John Hilla, has successfully assisted Livonia, Westland, Farmington, Northville, Ann Arbor, Inkster, and other Metro Detroit residents through the bankruptcy process for nearly 20 years.
We offer free consultations, understandable billing rates, and, most importantly, responsive and friendly customer service.
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