top of page
  • Writer's pictureRedd Law, PLC

When is Chapter 13 the Better Option?

A Chapter 13 bankruptcy is a repayment plan that is based on a person’s income and expenses. If a person can only afford $200 per month based on living expenses, then that’s how much he or she will pay to the bankruptcy trustee. Then, the trustee will divide the money up among the creditors. Like other forms of bankruptcy, creditors are not allowed to garnish wages, foreclose on property or take other steps to collect the debt. The repayment plan lasts for 3-5 years, then the remaining balance on dischargeable debt is cancelled.

A Chapter 13 can help someone become current on a mortgage payments. The Chapter 13 doesn’t decrease the mortgage payment, so it’s best for someone who missed mortgage payments due to a temporary financial setback. However, a Chapter 13 can be used to cancel a second home loan if the home is worth less than the amount owed on the first mortgage. The process is called stripping the lien and can potentially save a debtor a lot of money.

0 views0 comments

Recent Posts

See All

Everyone who files bankruptcy must disclose all of their real and personal property. The value of real estate can be easily done with an appraisal or market analysis. For cars, debtors can look at t

After most foreclosure sales in Michigan, the homeowners have the right of redemption for six months.  This means that they have an extra six months after the sale date before they have to move.  The

Anyone who files a Chapter 13 bankruptcy petition gains some familiarity with a Chapter 13 trustee. In Detroit, there are three Chapter 13 trustees. Each trustee administers cases assigned under a p

bottom of page