This is often referred to as a Consolidation Bankruptcy. This type of bankruptcy is often used save homes from foreclosure or stop cars from repossession. In this type of a bankruptcy a Debtor(s) enters into a monthly repayment plan that lasts from 3 to 5 years. This repayment plan can be used to pay the following:
• Catchup on mortgage arrears, and stop any actions for foreclosure
• Repay real estate taxes, and stop tax sales
• Pay off any leases such as rent to own contracts
• Pay off all car loans, often times at lower interest and a lower monthly payment than the original contract;
• Catchup on delinquent tax debt to the Internal Revenue Service (“IRS”), Missouri Department of Revenue, Illinois Department of Revenue, or even personal property taxes so that you can get your vehicles licensed and/or tags renewed
• Pay off Back Child Support
• Pay off loans secured by personal property, furniture, jewelry etc.
There are many more benefits and repayment options in a Chapter 13, and often times a Chapter 13 while difficult, can actually offer a more efficient clean slate than that offered by a Chapter 7. For Instance, divorce debt in a divorce decree defined often by the clause “hold harmless” language while not discharged in a Chapter 7, maybe fully discharged in a Chapter 13. If you are behind on a house or a vehicle loan, you are likely to lose it when filing a Chapter 7; however, in a Chapter 13 you can cure the delinquency and even pay most car loans off with a lower interest rate.
Every Chapter 13 Bankruptcy Plan is catered to each individual Debtor’s needs. Payment can vary greatly so it is important to discuss all debts with you attorney as each type of debt can have an affect the amount of your plan payment. Once you file a Chapter 13 your first plan payment is due 30 days after filing, so it is also important to discuss timing of your payments so that you can get the most out of your bankruptcy.