Chapter 13 Bankruptcy Lawyer Christopher German
A Chapter 13 also known as a re-organization: A chapter 13 is often the solution for people who are behind on their mortgage and wish to keep their home. A plan is created in which the mortgage company is paid the arrears over the course of three to five years. A chapter 13 is also ideal for people who have tax debt from recent years. Also, people who do not qualify for a Chapter 7 often file a Chapter 13, which will pay off some or all of their debts. The lawyers at the Law Office of Christopher German, LLC will work with you to create a chapter plan that addresses your needs.
Learn how Chapter 13 bankruptcy works, whether you are eligible to file Chapter 13 bankruptcy, what happens to your car and home in Chapter 13, differences between Chapter 7 and Chapter 13, how much you’ll have to pay through your Chapter 13 bankruptcy repayment plan, and more.
If you’re facing foreclosure or are simply behind in your mortgage payments, chapter 13 can be an option to save your home or vehicle. A chapter 13 bankruptcy filed before a foreclosure sale date allows you to delay the foreclosure and reorganize your debt. (Filing after a foreclosure sale leaves you at the mercy of the lender. At this point the lender can reinstate the original mortgage or agree to a new loan in lieu of the inevitable eviction.) Chapter 13 will also allow you to make up any past due monthly mortgage payments over a 3 to 5 year time frame (usually while simultaneously paying back unsecured creditors) to provide you more time to get current on your mortgage.
A Section 506 motion to strip off a second mortgage can be filed in chapter 13 (but not a chapter 7) if the balance on the first mortgage alone exceeds the home’s fair market value. The “strip off” renders the junior lien(s) unsecured – now akin to easily dischargeable credit card debt or medical bills. Stripping off a junior lien is easier if accompanied by evidence of the property’s diminished value on the date of the filing, supported by a written appraisal. An appraisal is necessary when the lender cites to its own valuation and objects to the strip off.
In chapter 13 bankruptcy, you can also “cram down” a car loan to its fair market value, significantly reduce the interest rate and stretch out the duration of monthly payments, if the vehicle is at least 2.5 years old.
A lender will almost always demand that the debtor sign a Reaffirmation Agreement on a home or vehicle, which re-obligates you to pay a new loan even if payments are the same. In case of future default, you’re still on the hook for this debt. Only a subsequent bankruptcy would discharge the debt revived by the Reaffirmation Agreement.
For this reason alone, unless the lender takes an extreme step such as lowering a very large portion of principal and interest on the debt, we almost never recommend Reaffirmation Agreements. Rather, even though a lender may threaten to seize collateral with a Reaffirmation Agreement, we have never seen this happen when the debtor instead remains current on payments. In other words, the lender will almost always take your money under current agreements.
An experienced Denver bankruptcy lawyer, Christopher German will specifically outline how to best keep your house or car, while getting rid of your debt and actually saving money by filing for bankruptcy. The Law Office of Christopher German will answer all questions about your secured debts in order to help you achieve a fresh start financially.