Chapter 13 can be a good financial planning tool to help you get your finances back on the road to success!
1. Keep my house.
If you have fallen behind in your mortgage payments, Chapter 13 allows you up to 5 years to catch up on the missed payments - this can be the difference between keeping your home and being homeless.
2. Get rid of my second and third mortgages.
The "up side" of a down economy is that real estate is worth less than when you bought it (read on, I have a point here). Because of this in many cases, your home is not worth the amount you owe to your first mortgage lender, let alone your second mortgage. For example, if your home is currently worth only $150,000 but you owe $210,000 in mortgages, with $160,000 owed to the first mortgage lender and $50,000 owed to the second mortgage lender, Chapter 13 allows you to REMOVE the second mortgage! That's right, if there is no value to the second mortgage, off it goes! At that point, the second mortgage is treated like an unsecured debt and the second mortgage lender will receive either $nothing or pennies on the dollar - they are paid the same as your credit cards under your Chapter 13 plan.
3. Pay back my taxes.
If you owe the IRS or the state some taxes and they tell you to pay up, or only give you a short time to pay the taxes owed, again, Chapter 13 allows you up to five years to pay the tax debt.
4. Stop harassing the person who co-signed my mortgage loan.
When you bought your house, you did not quite have the credit to do it alone so a relative or a friend co-signed the loan with you. When you got behind in your mortgage payments the lender did not just pursue you, they came after the co-signer as well to pay up. Chapter 13 has what is called the "co-debtor stay" - which means that while you are in bankruptcy, the co-signer cannot be contacted by the bank or dunned for the amount of money owed! That goes for friend or relative who co-signed other debt like loans or credit cards. That gives you the opportunity to catch up on the loan payments, and allows the co-signer peace and quiet while you are doing your Chapter 13 plan.
5. NO more dealing with collection agents.
Not only does the co-signer get relief from being bothered for your unpaid bills - so do you! As long as you are current in your Chapter 13 payments, your creditors can't bother you under the application of the bankruptcy code's "automatic stay". That's right, no more nasty phone calls! You receive peace and quiet while paying back your debts under your Chapter 13 plan.
Lesson learned: Bankruptcy can be a very useful tool in getting you back on the road to financial success.
If you or someone you know needs help, call a good bankruptcy attorney. The consultation is confidential. Most, like me, provide an initial FREE consultation.