Chapter 13 PLAN
The bankruptcy code provides that a Chapter 13 Debt Consolidation PLAN may run from a period of three (3) years to as long as five (5) years. During this period of time, you will pay to the Chapter 13 Trustee a monthly payment. That payment will depend on your individual needs as every individual situation is different, however, in general, the longer the PLAN, the lower the monthly payment. A Chapter 13 PLAN allows you to Consolidate all of your bills into One (1) significantly lower payment that you can afford. This Chapter 13 PLAN will stop all pending lawsuits, garnishments and prevent lawsuits from being filed against you. Because the Chapter 13 Debt Consolidation PLAN is a payment PLAN, no property will be taken from you and you will keep all of your property and personal belongings.
Our clients have used the Chapter 13 Debt Consolidation PLAN for some of the following situations:
- They have fallen several months behind in paying their mortgage and the mortgage company is demanding a lump sum payment to catch up the mortgage and the client does not have the money. The Chapter 13 PLAN provides in the payment to the Trustee the monthly mortgage payment which the Trustee then pays to the mortgage company. Additionally, monthly, the Chapter 13 payment provides for payment of a small amount of the mortgage arrearage so that by the time the Chapter 13 PLAN completes, the client is current on the mortgage. Thus, when the case closes the client begins paying their mortgage payment to the mortgage company as the mortgage is now current.
- The client owes IRS or Ohio income taxes which cannot be discharged and must be paid. The client pays the tax owed in the Chapter 13 PLAN, but the penalty on the tax is generally not paid. The IRS is stopped from collecting from you during your Chapter 13 case.
- Client’s car has been repossessed and there is a high interest rate on the loan. The car is returned to the client and the car is paid off in the Chapter 13 PLAN at a far smaller interest rate.
- Client’s house is in foreclosure and is to be sold at sheriff’s auction. A Chapter 13 PLAN stops the foreclosure and the client brings the arrearage and mortgage current by the end of the PLAN and resumes paying the mortgage to the mortgage company after the case completes as the mortgage is now current.
- Client has significant credit card debt. All interest and penalties assessed by the credit card companies stops when the case is filed. Typically, the total credit card debt in a Chapter 13 PLAN is discharged without payment whatsoever.
- Client’s residence is encumbered with two mortgages. When appraised, the house value is less than the balance owed on the first mortgage. In a Chapter 13 Debt Consolidation PLAN, the second mortgage can be stripped as a mortgage becoming a debt that is unsecured as in credit card debt and, typically, discharged without payment to the mortgage company.
- Client has a car that is worth far less than the amount owed to the finance company. In some instances, in a Chapter 13 Debt Consolidation PLAN, to pay off the car, you may only pay the value of the car, and at a far smaller rate of interest.
- Client is in arrears with the county treasurer and owes significant real estate taxes and may be subject to a treasurer’s auction sale. A Chapter 13 Debt Consolidation PLAN cancels the auction sale and pays the real estate tax arrearage to the treasurer.
Many clients are concerned as to what their payment would be to the Trustee. In a Chapter 13 Debt Consolidation PLAN clients have the choice of keeping secured debt, such as cars, houses, etc., or surrendering them back to the finance/mortgage company. Quite generally, your Chapter 13 PLAN payment consists of the secured debt you are retaining, taxes, if any, and the fees and costs in the case. At this point you may be considering inquiring about a Chapter 13 Debt Consolidation PLAN.