A Chapter 13 bankruptcy is like a reorganization of your financial life. In a Chapter 13 case, you file a “plan” showing how you will pay off some portion of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it allows you to keep valuable property – especially your home and car – if you can make the payments set forth in your plan. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you: 1) own your home and are in danger of losing it because you’ve fallen behind on mortgage payments; 2) are behind on car payments, but can catch up if given some time; or 3) have valuable property that does not qualify for an exemption under bankruptcy law, but you can afford to pay creditors from your income over time.
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