Chapter 13 bankruptcy, sometimes called the "wage-earner plan," is most often utilized by working people, who have the desire and ability to pay all, or a large portion, of their debts. Chapter 13 bankruptcy is a good option for individuals whose debt may not be discharged through Chapter 13 Bankruptcy such as student loans, or for those who earn too much money to qualify.

Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income (court filing fee, not including attorney fees or costs = $274).

·     Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

·     Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money you owe them from your future earnings. The period allowed by the court to repay your debts may be three or five years, depending upon your income and other factors. The court must approve your plan of repayment before it can take effect.

·     After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations (like mortgages).

You Don't Have To Lose Your Home

Save Your Home

Once we file a Chapter 13 Bankruptcy Petition on your behalf an automatic stay goes into effect and the lender is forced to stop a foreclosure sale on your home!

Filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes.

A chapter 13 Bankruptcy is a valuable tool to combat the mortgage crisis by allowing bankruptcy judges to “strip-down” mortgage debt in Chapter 13 when the mortgage principle exceeds the current market value of the house. The subprime mortgage crisis has caused and continues to cause many homeowners to lose their homes—often because they cannot afford their monthly payments once the initially low interest rate expires. Housing pundits estimate that between 2 and 3.3 million foreclosures will occur between 2007 and 2009, including 1 out of every five subprime mortgages made since 2005.3 Foreclosures are very costly to both borrowers and lenders--borrowers must bear the cost of relocating and lenders lose a high fraction of the value of the house by the time it is resold.

Foreclosure is extremely costly to both borrowers and lenders, and it would be in their joint interest to deal with the mortgage crisis by renegotiating many mortgages voluntarily. But very few renegotiations have in fact occurred. This is because most mortgages have been repackaged into mortgage-backed securities, where ownership is divided among multiple security-holders who have divergent interests. As a result, they are unlikely to agree on any changes in the loan terms. In addition, while all mortgages have a servicer who acts on the owners’ behalf, most mortgage servicing contracts compensate servicers for the costs of foreclosing, but not for the costs of renegotiating. Another problem is that many homes in default have second mortgages, and the second mortgage holder can prevent the first mortgage from being refinanced unless the second mortgage is paid off.

Filing under Chapter 13 stops lenders from foreclosing and gives debtors extra time to repay mortgage arrears. Debtors can similarly use Chapter 13 to prevent repossession of their cars.

To make sure a Chapter 13 Bankruptcy is right for you, and to initiate a Chapter 13 filing, contact the Law Office of Robert J. Stirling at (916) 851-5909.