Law Firm of Wendy R Morgan

- Bankruptcy -

Preamble - Chapter 7 - Chapter 13 - Prerequiste

- CHAPTER 13 REORGANIZAION -

    Certain debts are not dischargeable in Chapter 7 Bankruptcy, such as most student loans, the majority of tax debts, parking tickets, traffic or criminal fines, child support and maintenance, debts as a result of fraud , child support and maintenance Court orders, judgments against a debtor which are based upon crimes or acts of moral turpitude, and other types of debts. Under these circumstances, a debtor(s) who desires relief under the Federal Bankruptcy Laws must look to a Chapter 13 Reorganization Bankruptcy. A Chapter 13 Reorganization Bankruptcy is a reorganization of the debtor(s) estate and distribution to creditors based upon the overall non-exempt assets and income and debtor. In the event the debt is not dischargeable in Bankruptcy the debtor will be able to pay it back through the Chapter 13 Reorganization plan. The benefit is that the debtor (s), during this Chapter 13 Reorganization period (and premised upon the debtor having a payment plan approved by the trustee and making their scheduled and approved payments in the timely basis required), will be protected from certain lawsuits, entry an enforcement of many judgments, garnishments, levies, repossessions, foreclosures and the like. In a Chapter 13 creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.

    In cases where the debtor(s) assets exceed the allowed state exemptions, those debtors do not qualify for a non-asset Chapter 7 Bankruptcy and would have to sell these excess assets if they were to pursue a Chapter 7 liquidation Bankruptcy. The rule is that a creditor is entitled to receive the same amount in a Chapter 13 as that creditor would receive in a Chapter 7 Bankruptcy.

    If you have equity in your home, you can file a Chapter 13 bankruptcy, protect your equity, and repay your mortgage arrears. Although refinancing may be another option, it is not always the best option and most debtors cannot qualify for a refinance. Refinancing or taking out a second mortgage may also create an additional mortgage payment that you cannot afford with most likely a higher interest rate, which will reduce your equity in your home even further, instead of repaying your mortgage arrears through a Chapter 13 bankruptcy.

    However, in order to qualify for a Chapter 13 bankruptcy you must be working or have a consistent source of income for your repayment plan to be approved by the court. Not only must you be able to pay for your monthly living expenses, but you must also be able to make the monthly payment to the trustee to consolidate your debts.

    Debts that are generally consolidated in a Chapter 13 bankruptcy are secured debts the debtor wants to keep such as mortgage arrears, balances on vehicle loans, student loans, credit card debts and unsecured debts. All outstanding debts must be included in the Chapter 13 bankruptcy consolidation

OTHER BENEFITS OF A CHAPTER 13 REORGANIZATION

STOP FORECLOSURE IMMEDIATELY
    If your home is presently in foreclosure, or you are behind on your mortgage payments and in foreclosure is a reality, a Chapter 13 bankruptcy filing will stop the foreclosure any time prior to the sale. The ability to provide a plan with your attorney which is approved by the trustee will allow you to repay your mortgage arrears through your Chapter 13 bankruptcy. You will still be obligated to make all future mortgage payments directly to the mortgage company, but they may not foreclose to collect delinquent mortgage payments and to collect other penalties and late interest charges. Under new and recent bankruptcy laws, there is also availability to renegotiate a modification of the current monthly mortgage payment amount and the interest rate if the debtor can qualify with the mortgage company for same or if the Bankruptcy Court forces the creditor to accept the loan modification which is termed a “cram down.” Some debtors are able to utilize the Chapter 13 plan to obtain a protective status quo while they are trying to sell their real estate, negotiate a short sale or deed in lieu of foreclosure while in the protective realm of the Bankruptcy Court automatic stay protection. This does not apply to all debtors under a Chapter 13 but provides some innovative ideas when the debtor has exhausted other means of trying to negotiate with the mortgage company outside a Bankruptcy and is facing foreclosure without other outside options appearing to be available.

STOP VEHICLE REPOSESSIONS
    If the "repo" man is looking for your car, The debtor first loses possession of the vehicle and then gets sued for the outstanding deficiency balance. A Chapter 13 bankruptcy will stop the finance company from repossessing your car. The past due payments and the entire balance on your vehicle loan will be consolidated, which will enable you to pay off the entire balance over a period of time approved by the trustee. Premised upon the debtor having a payment plan approved by the trustee and making their scheduled and approved payments in the timely basis required), the vehicle finance company can no longer repossess your car, and you will no longer have to make a payment directly to the finance company. Only one payment is made, and that is to the Chapter 13 trustee. Under certain circumstances we can even recover your vehicle after repossession and consolidate the remaining balance.

CONSOLIDATE STUDENT LOANS
    Although you may not eliminate most student loans in a Chapter 7 bankruptcy, you can consolidate them, with your other bills, in a Chapter 13 bankruptcy, and stop collection action against you. Stop the collection action and garnishments related to student loan debts and consolidate your bills so that you may repay them in a plan that is feasible for you.

PROTECT COSIGNERS
    Your cosigners receive the same protection that you receive under Chapter 13 bankruptcy. Through a Chapter 13 bankruptcy, we will protect your cosigners from collection activity, and the creditors must wait to be paid. So, if you friend or relative cosigned on your vehicle, and you are having trouble affording the payments, your remaining balance may be placed inside a Chapter 13 bankruptcy.

Call 24/7
Locally - 847-259-5700
or
Toll Free - 1(800) WR MORGAN / 1(800) 976-6742
for more information

- Office Hours 8:30 am to 5:30 pm CST -

- Evening Appointments Available -