bruce magness attorney at law 

Chapter 13 (Reorganization)

In a chapter 13 case, you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property—especially your home and car—which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these Chapter 13 payments will allow you to once again begin making your regular mortgage payments on time while having enough money to provide for groceries, clothing, medical needs, transportation, and the like, by consolidating your car payments with the arrearages on your mortgage and your unsecured debt like credit cards and signature loans.

            You should consider filing a chapter 13 plan if you

(1)   own you home and are in danger of losing it because of money problems;

(2)   are behind on debt payments, but can catch up if given some time;

(3)   have valuable property which is not exempt, but you can afford to pay creditors from your income over time.  You will need to have enough income to pay for your necessities and to keep up with the required Chapter 13 payments as the come due.

In a chapter 13 case, the Debtor makes one payment to the Chapter 13 Trustee, and the Trustee distributes a portion of the funds to the various creditors of the Debtor. In the Northern District of Texas, which includes Lubbock and the South Plains, debts secured by vehicles, along with any arrearages on home mortgages, debts secured by furniture, and the like, are combined with debts owed on unsecured debts such as credit cards and signature loans to make one payment, so as to reduce the total monthly debt burden of the Debtor. This often enables the Debtor to once again have adequate funds for groceries, gasoline, utilities, medicines and other necessities, at the same time stopping foreclosures on the homestead or repossessions of the family vehicles. If a consumer (non-business) debt was co-signed or guaranteed by another person, the plan will be prepared so as to pay the debt in full to protect the Cosigner, so that no attempts will be made to collect from him or her. However, Debtors should be careful to complete the plan, as lack of full payment under the plan by the Debtor will result in the Creditor being able to pursue the Cosigner once again.      

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