Chapter 13 bankruptcies are primarily known for their ability to help their filers eliminate the debts they owe to creditors and lenders. They also offer the opportunity for debtors to save their homes from foreclosure through a court-approved payment plan.
Below, our Kentucky bankruptcy team outlines just how Chapter 13 bankruptcies can keep your home in your hands.
How Chapter 13 Bankruptcies Work
Before we explain how they save your home, we first need to outline the Chapter 13 process. It is referred to as the “reorganization” chapter of bankruptcy and takes a 3-5 year period to complete. This chapter is best-suited for those with a regular income to repay a portion or all of their debts over an allotted period of time.
The amount of time these cases will take also depends on your income. If your income falls below the state average, your payment plan will span around 3 years. If your income is greater than the state average, your plan will generally last 5 years.
How Chapter 13 Saves Your Home
The first way in which this chapter can save your home is through an “automatic stay.” It is put in place as soon as the bankruptcy papers are filed and makes any creditor collection action illegal. This means that it can halt the threatened foreclosure of your home instantly when you file.
Chapter 13 also does not require you to liquidate your assets to pay off debts. Instead, you are able to utilize your payment plan to spread out past-due payments that would otherwise need to be paid immediately, such as your mortgage payments. These new payments are also typically lower than what you originally had to pay, providing a clear path to paying off your debts during the 3-5 year period.
Saving your home is possible, and we are here to help you achieve success. If you would like to learn more about how Musselwhite Meinhart & Staples can help you, get in touch with us today through our website or give us a call at (270) 200-6326 to schedule your free consultation.