Chapter 13 in Renton
If you need help catching up on a mortgage, a car loan, back taxes or back child support, a Chapter 13 may be the best option for you. You may have to file a Chapter 13 because your income is too high for a Chapter 7. A Chapter 13 can do accomplish more goals for you as well, such as removing a second mortgage from your house, reinstating a driver's license suspended for tickets or discharging debts you were ordered to pay in a divorce.
Chapter 13 is a consolidation plan that lasts three to five years. It can take care of secured debt, such as mortgages or car loans and other debt such as back taxes, back child support and spousal maintenance. All debt must be included in a Chapter 13 plan. Unsecured debt, which is debt that is not backed up by property, is paid at a percentage based on what you can afford. Even if you have a relatively high income and you must pay 100% of your debt, a Chapter 13 plan is an orderly, predictable and secure way of paying it back while eliminating interest and late fees. You know exactly when the plan ends and you are debt free.
If you are facing foreclosure, any bankruptcy will stop the process immediately. A Chapter 13 also provides a plan to catch up on the mortgage. While you are making payments, the mortgage company must go along with it as long as the plan is approved by the bankruptcy court. If your house is worth less than the first mortgage balance, you can remove the second mortgage from your home in a Chapter 13. The plan also lets you get caught up on property taxes and water bills.
A Chapter 13 starts by filing a bankruptcy petition and other documents that show your income, budget, property, and debt. You also file a plan with the bankruptcy court. A month after you file your case, you meet with your trustee who examines your plan. Creditors or the trustee can object to your plan. The final decision on approving, or confirming, your plan is up to the bankruptcy judge. Your attorney helps you through the whole process. Most cases can be resolved by negotiating but it is highly unlikely you will be able to confirm your plan without legal assistance. The process can be complicated.
After you make all your payments, you receive a discharge which wipes out any debt that is dischargeable. Exceptions to the discharge include student loans, some back taxes, back child support and alimony and fines. Taxes, child support and alimony must be paid off in the plan. Sometimes you can only pay a portion of your student loans and fines. Chapter 13 has an advantage over Chapter 7 in that if you were ordered to pay marital debt in a divorce, you can wipe out any obligation to do so.