Chapter 13 Bankruptcy and Mortgage Arrears

Chapter 13 Bankruptcy and Mortgage Arrears

One of the major reasons people file for Chatper 13 bankruyptcy protection is because they are significantly behind on their mortgage payment. Sometimes the individual is expecting a foreclosure notice, sometimes they have already gotten one. Either way, chapter 13 bankruptcy is an excellent way to protect your house, and keep it out of foreclosure.

As soon as you file a chapter 13 bankruptcy case, your house is protected. So if you had a foreclosure date set on the house, as soon as you file, that’s null and void (unless there are recent multiple bankruptcy filings).

The process is usually that you file for protection, then immediately after, start making your regular mortgage payment. In chapter 13, whatever you are behind gets lumped together and put in a chapter 13 bankruptc plan. You will make a payment to a bankruptcy trustee. That payment will pay off the arrearage. So what happens is that when the plan is done, you are now current on your home.

Many enter into chapter 13 for various reasons. But is is an excellent way to save your home if you experienced a period of finanical difficulty and got behind on mortgage payments.

Feel free to contact our office if you have any questions about this. 480-355-1377.

Chapter 13 Bankruptcy and Vehicles

Chapter 13 Bankruptcy and Vehicles

Chapter 13 bankruptcy is an excellent way to keep your car and pay it off at a reasonable interest rate. Almost everyone has a car. And nearly everyone has a car payment. Sometimes we get that car we’ve always wanted and then wham! Something happens and we’re searching for a way to continue being able to afford that car.

If you’re in a situation where you’re struggling to make car payments as well as making ends meet, Chapter 13 bankruptcy is an excellent option to consolidate debt and get your car paid at a reasonable interest rate.

What happens in Chapter 13? Basically you pay your “monthly disposible income” to a bankruptcy trustee over a period ranging anywhere from 3 to 5 years. The money you pay to the bankruptcy trustee goes to creditors. What creditor gets what funds, depends on the nature of the creditor. In chapter 13 bankruptcy, secured creditors get paid before unsecured creditors. So if you had a vehicle loan and file chapter 13, the lender for the vehicle would be paid before, say, a credit card.

Let’s look at an example. Assume Bob has a car he’s owned for 1 year and owes the bank $25,000.00 at 9% for the vehicle. Assume Bob also has $50,000.00 in credit card debt. In this situation, Bob could file chapter 13, make a monthly payment to a bankruptcy trustee, and pay his vehcile off at a 4% interest rate, rather than a 9% interest rate. At the end of his bankruptcy plan, not only would Bob’s car be completely paid off, but the $50,000.00 credit card debt Bob had would be discharged as well. This works out great for Bob, because not only is he out of that horrible credit card debt, but he’s also paid his car off fully, and he’s only paid $2,622.35 in interest at 4%, rather than $7,034.61 in interest at 9%.

Note: I’ve seen many monthly chapter 13 plan payments that are less than the individual’s actual vehicel payment.

If you’re in a difficult financial situation and have a car that you don’t want to lose, consider all of your options. Consider Chapter 13 bankruptcy. Feel free to contact us for a free consultation with an Arizona bankruptcy attorney. 480-355-1377

How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer?

How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer?

Of course, many people have co-signers on a car, truck, ATV, etc. When faced with a period of economic hardship, many will not even consider bankruptcy when they have a co-signer on a debt. This is because, it is the common perception that bankruptcy will not protect a co-signer, and said co-signer will be left “holding the bag.” This is NOT TRUE. Bankruptcy can indeed protect a co-signer.

NOT CHAPTER 7 BANKRUPTCY – If you file Chapter 7 bankruptcy, the creditor can proceed against your co-signer, according to the terms of the original contract that you and the co-signer entered into, once the bankruptcy is over. If one of your major concerns is to protect a co-signer, then you should consider Chapter 13 bankruptcy.

CHAPTER 13 BANKRUPTCY CAN PROTECT A CO-SIGNER. You can protect your co-signer to the extent that the Chapter 13 payment plan proposes to repay the debt, and if certain conditions are met. The debt must be a consumer debt, that wasn’t incurred pursuant to a business transaction, and the co-signer cannot have been the sole benefactor of the debt.

If you file Chapter 13 bankruptcy, as long as you are making the required Chapter 13 planned payments, creditors cannot collect, or even attempt to collect from the co-signer. The purpose of this provision of Chapter 13 is to allow you to repay the debt without creditor pressure.

At the Yontz Law Group, we are more than happy to meet with anyone to explain their options. Contact an experienced Arizona Bankruptcy Attorney here.

Contact the Yontz Law Group, for a free consultation with a bankruptcy attorney in Phoenix, Mesa, Gilbert, Apache Junction, Chandler, or throughout the state of Arizona 480-355-1377.

What is a “Motion To Lift the Automatic Stay” (Bankruptcy in Arizona)?

What is a “Motion To Lift the Automatic Stay” (Bankruptcy in Arizona) ?

 A “motion to lift the automatic stay” is sometimes filed by a lender/creditor (usually for a home or vehicle) after a Debtor has filed bankruptcy (most of the time, after filing Chapter 7 bankruptcy).  It is a process by which said lender/creditor obtains the bankruptcy court’s permission to foreclose on real, or repossess personal property (such as a vehicle), that is liened by said lender/creditor.

 The “automatic stay” is the protection that you as a Debtor get when you file bankruptcy. It is what halts all of your creditors. After filing bankruptcy (usually Chapter 7 bankruptcy), for any creditor to take action against you, or a piece of property that you have possession of, that lender/creditor must “lift” this protection by filing a motion with the court.

 A “motion to lift the automatic stay” is usually filed where the debtor, either before or after filing bankruptcy, is far behind on payments for a piece of real or personal property.  It is almost always filed by a lender/creditor where Chapter 7 bankruptcy was filed within a short time before a foreclosure date.

 If you’re considering filing bankruptcy, be certain that you know the effects of the automatic stay in regard to your property.  Remember that all the chapters of bankruptcy are different, and depending on the chapter of bankruptcy you file, your property may be affected differently. This is one of the many reasons why it is important to contact a bankruptcy attorney if you’re thinking about filing bankruptcy.  It is especially important to seek the advice of a bankruptcy attorney who is familiar with the rules in your area (e.g if you’re filing bankruptcy in Arizona, it is important to contact an Arizona bankruptcy attorney).

How Long Does Bankruptcy Take?

How long will the bankruptcy process take?

Bankruptcy Timeline

The timelines and processes involved in a bankruptcy case in Arizona, are different depending upon which chapter of bankruptcy you file (Chapter 7, Chapter 13 or chapter 11). Our law firm offers a free initial consultation to discuss your situation. Below are the basic timelines for bankruptcy cases in Arizona.

8 Years Before Filing – In Arizona, and every jurisdiction, you must wait 8 years to file a Chapter 7 bankruptcy case if you have already received a discharge from a prior Chapter 7.

4 Years Before Bankruptcy – You must wait at least 4 years to file for a Chapter 13 bankruptcy if you have already filed for Chapter 7, 11 or 12 previously. For a prior Chapter 13 case, you need only wait 2 years after the bankruptcy discharge.

180 Days Before Filing – You must take a credit counseling course from a certified credit counseling agency in order to be eligible to file for bankruptcy. These course are convenient as you can do them on-line, and take up about 60 minutes of your time.

90 Days Before Filing – You must be a resident of the state in which you are filing for a minimum of 90 days or you must have been a resident of Arizona for at least 90 days.

Filing – Your bankruptcy case officially begins when you file your petition with the bankruptcy court. At this time, creditors cannot take action against you, and you are officially protected.

After Filing and Before Discharge – In Chapter 7 and Chapter 13 bankruptcy cases in Arizona, you are required by the Arizona Federal District Court to complete a debtor education course provided by a certified agency. Some of these courses can be very educational and helpful. These courses are convenient because like the initial credit counseling, can be done on line. Our law firm recommends Dave Ramsey’s Debtor Education Course (www.daveramsey.com/bankruptcy).

15 Days After Filing – At this time, you should have gotten a letter from your trustee. You have 15 days after filing for bankruptcy to provide the bankruptcy trustee with specific information about assets, expenses, liabilities, income and more.

45 Days After Filing 341 Meeting of Creditors – In Arizona, you will be in a meeting with the bankruptcy trustee about 45 days after filing for bankruptcy. If you live in Maricopa county your meeting will be in downtown Phoenix, if you live in Pinal County, your meeting will be in Casa Grande. These meetings are held on the record and under oath. They are generally straight forward with a few standard questions, and last about 5 to 10 minutes. Our office will prepare you for your meeting and there will be no surprises.

180 Days After Filing – Government agencies that have claims against you, such as taxes owed to the IRS, will have 180 days after the date of your petition to submit proof of their claims against you.

6 to 9 Weeks after the 341 meeting of creditors – in a chapter 7 bankruptcy case, you will receive a letter from the court, telling you that your case has been discharged.

3 to 5 Years After Filing (Chapter 13 only) –Approximately 3 to 5 years after the date of your first payment based off your Chapter 13 repayment plan, you will receive a formal discharge from the court. All eligible debts will be discharged.