Joseph Seagle asked:




In Bankruptcy cases, specifically Chapter 11 and Chapter 13, lien stripping is an effective tool in reducing the payments made to creditors. In Chapter 13, the debtors reorganize their debts into a repayment plan whereas Chapter 11 is for businesses and individuals whose debts exceed the limits in Chapter 13.

Lienstripping is referred to as the debtors’ ability to reduce an undersecured creditor’s claim by valuation of the underlying collateral. This is also known as bifurcation where the undersecured creditor’s claim is divided into secured portion and unsecured portion. The unsecured portion of the lien is stripped away from the collateral and becomes an unsecured claim. For example, if a debtor purchased a commercial building with a mortgage of $500,000 and the current value of the building is $300,000. The creditor’s lien is undersecured and can be bifurcated into $300,000 secured claim and a $200,000 unsecured claim. The debtor is only required to pay back $300,000 over the life of the loan and the remaining $200,000 can by discharged at the end of a successful plan. Under nonbankruptcy laws, the debtor is required to pay the entire amount since lienstripping is unique to bankruptcy cases. Lien stripping is not available in Chapter 7 cases which are used in discharging unsecured debts because liens ride through Chapter 7 cases untouched.

However, there are limitations as to what the debtor can do in valuing claims on the primary residence and vehicles financed within 910 days. Congress in its wisdom has prohibited individuals from modifying loans on their primary residence. If the debtors have one mortgage on their home, they cannot reduce the loan to the value of the house. However, the debtor is allowed to strip away a second mortgage that is not secured by the value of the house. For example, if the debtor has a first mortgage of $300,000 and a second mortgage of $100,000 and the house has a value of $250,000, then the debtor is allowed to strip away the second mortgage. In Chapter 13 cases, Congress applied another limitation to stripping liens on vehicles financed within 910 days of filing bankruptcy. A vehicle that has been financed longer than 910 days can have its lien reduced to the value of the collateral which allows the debtor to make reduced payments based on the current value of the vehicle and not the outstanding balance of the loan. The interest rate can also be reduced to the current market rate and the debtor is not required to pay the contract rate.

http://rexkaufman6721.tripod.com/chapter13bankruptcynow12/index.blog/1903264/using-chapter-thirteen-bankruptcy-to-stop-foreclosure/

Michael Russell asked:




Chapter 13 bankruptcy is provided for the wage earner who can use his income to pay his creditors over a specified time period. Chapter 13 is a reorganization of the debt owed to creditors with a payment schedule set up whereby the wage earner makes timely payments to the creditors over a three to five year payment period.

The court may not allow a filing of chapter 13, depending on whether or not a person’s income is sufficient to repay some or all the debt. It has to be established with the court that the income is steady income and is not too low. Thus, chapter 13 is not suited for everyone.

Also, there is a limit to the amount of debt a person is carrying to qualify for filing a chapter 13. Total secured debt must not exceed $922,975 and total unsecured debt must not be more than $307,675. Secured debt is backed up with collateral such as a home or a car; while unsecured debt is balances on credit cards, signature loans, medical bills, etc.

Before you can proceed with filing a chapter 13, you are required to complete a course in personal financial management. This credit counseling course has to be approved by the court trustee. There is a fee for this course, but if you are unable to pay, you will receive the counseling free of charge.

The court will determine how much of your debt you will repay and you must begin those payments within thirty days after filing. These payments are usually made to the bankruptcy trustee to be forwarded on your creditors. The court may require these monthly payments be automatically deducted from your wages and sent to the trustee. Three percent to ten percent of each monthly payment is collected by the trustee as their commission. It is absolutely imperative that these monthly payments be paid and be paid on time.

Under chapter 13, there are certain debts that must be paid in full. These include child support, alimony and some tax obligations. These debts are non-dischargeable and must be paid one-hundred percent.

Bankruptcy law is a federal law; however, there are state laws pertaining to bankruptcy, so specific rules governing bankruptcy depends on the state of residence and filing.

The purpose of chapter 13 is to give a person a chance for a fresh start financially. It gives them protection from creditors by placing a hold on all asset and debt collections and provides the court time to work out a legal judgment that is accepted by all parties. However, there are consequences of bankruptcy in the form of poor credit and having to pay higher interest rates because of the bankruptcy on the credit report. Thus, bankruptcy filing should be thought through seriously and advice should be sought through an attorney.

There are alternatives to bankruptcy such as debt consolidation, out of court settlements or to just simply do nothing. If you have little income and property, then you are ’sue-proof’, which means if anyone were to sue you, they wouldn’t be able to collect anything anyway because you have nothing they can take. The law provides they cannot take your basic necessities such as clothing, food, household furnishings, etc. Most creditors will not bother suing someone knowing there is nothing for them to get. Instead, they will write off the debt, which does go on your credit report, but will be removed after seven years.

It’s important to weigh your options before making a final decision on whether to file a bankruptcy.

http://www.zimbio.com/chapter13bankruptcynow35/articles/3/Chapter+Thirteen+Bankrupcy+Rules

Jon Arnold asked:




Only a few years ago, Congress made multiple huge changes to the bankruptcy laws which impacted how bankruptcy would be filed, and even who is eligible. For example, no longer can you file bankruptcy just because you are tired of paying your bills, but with the new laws, there is a defined set of procedures that must be followed for each chapter being filed, and your financial status will be evaluated under a microscope, where you must be approved before you can even file.

But one of the areas that was left pretty much untouched by the wide range of changes was Chapter 13 Bankruptcy. This chapter was originally constructed to prevent a home from being put on the foreclosure block. But with the massive number of foreclosures that are happening in the US today, it is unfortunate that many people still do not know that Chapter 13 Bankruptcy filing can still be used to prevent foreclosure on their home.

For the average consumer, there are three different types or chapters of bankruptcy that may be available to them, depending on their specific circumstances. The first one is Chapter 7 Bankruptcy, which is the most common type and is also sometimes referred to as a liquidation. Obviously the reason it is known as liquidation is because most of their debt is discharged by allowing the court-appointed trustee to liquidate all of their non-exempt assets. Even with this chapter, however, be aware that there are certain types of debts that cannot be discharged by going bankrupt.

Although it used more appropriate to be used by either businesses or people with substantial assets and income, another type of bankruptcy available to the consumer is Chapter 11, frequently also known as a business reorganization. This type does not wipe out debts, but rather it allows the person or business to reorganize its debt structure and make revised payments to the creditors, sometimes over a longer period of time, and sometimes also with a reduced interest rate. Creditors usually are willing to do this, since collecting their money over time and with interest is certainly better in their eyes than to have the debt wiped out completely via a different chapter.

The last type or chapter of bankruptcy available to the consumer is Chapter 13, frequently also known as the Wage Earner’s Reorganization. This type is the least expensive to file and is typically used by consumers who still maintain their ability to make their payment obligations, usually within three to five years. The total value of their assets which are classified as non-exempt is used as a basis and guideline for the amount that needs to be repaid over this period of time, as well as considering their level of income and any debts which cannot be discharged.

But what many consumers do not realize is that Chapter 13 Bankruptcy also allows property owners to stop foreclosure proceedings if they are behind on their mortgage payments. While the same can be said for the other chapters of consumer bankruptcy, Chapter 13 is particularly designed to permit the consumer to pay the delinquency in equal monthly payments for as long a period of time as 60 months (5 years). The mortgage lender has no choice but to agree to this, as long as all the other requirements and qualifications of this chapter are met.

The procedure to be qualified to file this chapter is more stringent than the others, since it involves a thorough examination of total debt and total income. No chapter of bankruptcy is any longer consider to be a “do-it-yourself” process with all the new legal requirements in place, so regardless of what chapter you are thinking about, it is strongly recommended that you consult with a qualified bankruptcy lawyer and ensure that both you and your property, combined with your specific situation, actually do qualify.

The biggest benefit that you can have with Chapter 13 bankruptcy, if you qualify and if you are facing foreclosure proceedings, is that it buys you time. That time can be used to make your current financial situation better, or it can also be used to find the right buyer for your property. If you move forward with this, keep in mind that the time you are granted with this is finite, and you need to start planning and take action NOW.

http://chapter13bankruptcynow68.wetpaint.com/page/Chapter+Thirteen+Bankrupcy+Rules+%2830%29

Steve Bingman asked:




In bankruptcy Chapter 13 mortgage foreclosure is either stopped or at least temporarily avoided.
Here’s how.

First, just in case you are not familiar with a Chapter 13 bankruptcy, it is a bankruptcy court approved payment plan where the debtor (the person filing bankruptcy) pays a bankruptcy trustee each month and then the trustee pays the debtor’s creditors.

There are several aspects of a Chapter 13 bankruptcy that work to help people facing mortgage foreclosure. The first aspect is actually applicable to all bankruptcies. It is called the “automatic
stay”.

By law, whenever anyone files bankruptcy, regardless of the type of bankruptcy, there is an immediate “automatic stay” (automatic temporary stopping) of most civil proceedings against the person filing bankruptcy. What this means is that if someone is facing mortgage foreclosure and the person files bankruptcy, the mortgage lender has to immediately stop its’ foreclosure action until it gets permission for the bankruptcy court to proceed.

In a Chapter 13, the bankruptcy court will not lift the “automatic stay” and grant the mortgage lender permission to proceed with a foreclosure until the debtor (the person filing bankruptcy) fails to make his payments to the bankruptcy trustee. As long as the debtor pays the monthly payments to the trustee and pays his regular mortgage payments, the “automatic stay” will remain in force and the mortgage lender can not do anything.

The second aspect of a Chapter 13 that works in favor of people facing foreclosure is that it allows a debtor to pay mortgage arrearage over time, normally 3 to 5 years. In most foreclosure cases, a person has not paid his monthly mortgage payment for several months and the mortgage lender demands full payment of the delinquent monthly payments (arrearage) in lump sum before the lender will consider stopping foreclosure. Most people cannot pay the lump sum.

In a Chapter 13 bankruptcy, a debtor can pay the arrearage over time. He does not have to pay it all at one time. Spreading the lump sum over time means paying smaller monthly payments until the total arrearage is paid. A creditor can object to the amount to be paid each month towards the arrearage, but once the bankruptcy court approves the payment plan, the creditor can not do anything except take the payments.

A third aspect of a Chapter 13 bankruptcy that helps people facing mortgage foreclosure is that unsecured creditors may be paid a portion or all of what is owed to them. What this is really doing is reducing the amount of debt that a person has to pay back each month. By paying unsecured creditors less each month, there is more money available with which to pay a secured creditor such as a mortgage lender. Therefore, it should be easier for a debtor to pay his monthly mortgage payment.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

This article may be republished, but the wording must not be changed and the author links must
remain active.

http://rexkaufman.vox.com/library/post/the-rules-of-chapter-13-bankruptcy.html

Nick Adama asked:




For most homeowners, bankruptcy is certainly not their first choice to save their home from foreclosure. This is for a very good reason, as the credit effects can be quite serious and its results are generally poor, at best. Many of those who file bankruptcy to get out of foreclosure find themselves right back in the foreclosure process within in months of entering bankruptcy. Putting off losing the home is obviously not the reason most homeowners file, as they will then be stuck with both a bankruptcy and a foreclosure on their credit.

Chapter 7 Bankruptcy

In any event, homeowners facing foreclosure can not include the house in a Chapter 7 bankruptcy. Chapter 7 is only for unsecured debt, such as credit cards, store cards, personal loans, and the like. The mortgage is secured by the property, so it would not be dischargeable under Chapter 7. The clause in the mortgage paperwork that keeps it from being included in a Chapter 7 case is that it states the mortgage loan is secured by the underlying collateral, the property itself. Chapter 7 does not discharge secured debt, so this combination excludes the mortgage and this type of bankruptcy from having anything to do with each other.

Chapter 7 bankruptcy may, however, serve a purpose in freeing up income that the homeowners could use to keep on top of their mortgage payment. Keeping a roof on top of their heads is much more important than financing a new television or furniture, and credit card companies who are unwilling to work with homeowners in financial trouble will have to bear the costs of their poor lending decisions. Discharging most of these types of debts can significantly free up income, which can immediately be used to pay down the arrears on the mortgage or establish a repayment plan or other workout program. Homeowners with a debt-to-income ratio too high will not qualify for these bank workout programs, so discharging some of this high-interest, unsecured debt through Chapter 7 may be a reasonable path to getting the mortgage back on track.

Chapter 13 Bankruptcy

Homeowners who want to file bankruptcy to stop foreclosure can include the house in a Chapter 13 filing, which is a reorganization of the debt with a payment plan mandated by the courts. But if the house is already too expensive, then agreeing to an expensive payment plan would not make a whole lot of sense. In Chapter 13, the mortgage payments might very well go up, because the homeowners have to pay the regular monthly mortgage, as well as a portion of the amount that they are in default. Falling behind on this type of bankruptcy almost always results in the house going back into foreclosure and sold at a county sheriff sale.

Especially if the homeowners fall behind on the Chapter 13 plan, they will be in serious danger of losing the home very quickly. Bankruptcy does not actually stop foreclosure — it only puts the process on hold and gives the owners protection under the courts to pay back what they have fallen behind. Thus, if the payments are not made as agreed, the bank will request that the courts lift the stay and allow them to proceed with the foreclosure process. And the lender will be able to proceed as if the bankruptcy never occurred, starting up right from where they left off. This can often result in a sheriff sale being scheduled very quickly, within a matter of weeks.

Filing bankruptcy to stop foreclosure is a decision that homeowners need to consider very carefully, and even potentially consult with a lawyer for approved legal advice. The only real way to get rid of the mortgage and no longer worry about the property is find some way to sell the house, give a deed in lieu of foreclosure, or have it be foreclosed on by the bank. The county sheriff sale will eliminate the mortgage liens and transfer ownership of the property. The homeowners will have to deal with a foreclosure on their credit for 7-10 years, though. There are no easy decisions during the foreclosure process, of course, but the possibility of facing foreclosure and bankruptcy on the same house should be avoided.

http://rexkaufman6721.xanga.com/700025422/using-chapter-thirteen-bankruptcy-to-stop-foreclosure/

Mike Selvon asked:




Chapter 13 bankruptcy is often their best option for debtors who decide to stop collection efforts from their creditors but still want to repay their debts. People who have fallen behind in their mortgage payments often choose this option because it allows them a chance to “catch up” before their home is foreclosed upon. Filing for Chapter 13 will stop the collection efforts of all the creditors that the debtor lists on the petition and it allows them a variety of options for repayment, if they meet the eligibility requirements.

Foreclosures are the biggest reason that most people choose Chapter 13 bankruptcy rather than the more attractive Chapter 7. With Chapter 13, homeowners who face foreclosure proceedings can halt the legal actions by choosing this bankruptcy option.

A court appointed bankruptcy trustee will act on the behalf of the homeowner to make provisions with the mortgage company. The homeowner is then allowed to make their monthly mortgage payments with an extra amount each month until they have caught up on their delinquent payments.

Another thing that Chapter 13 bankruptcy affords to debtors is the opportunity to repay secured debts over a period. Oftentimes, the payment plans reduce the amount of the monthly payment that the debtor was paying. While Chapter 7 is the most popular option in bankruptcy, many people choose Chapter 13 because they feel a moral obligation to repay their debts.

This type of bankruptcy gives them the help that they need to negotiate with their creditors. It also provides some “wiggle room” for repaying debts with a timely schedule. Psychologically, this form of bankruptcy is less detrimental to people’s self-images because they have fulfilled their financial obligations rather than simply having them completely discharged.

Chapter 13 bankruptcy is similar to entering into a debt consolidation loan, which is often an option many people exhaust before having their debts discharged by courts. Both instances involve the debtor giving the monthly payment to an appointed trustee. The trustee then relegates the payments to the creditors according to the agreement.

For purposes of getting a mortgage, many companies view both of these equally. In other words, a debt consolidation loan is the same thing as filing for Chapter 13 bankruptcy in the eyes of many mortgage companies. One advantage of these options is that the debtor does not need to have direct contact with the creditors who can have a significant negative impact on a person’s self-esteem.

Many debtors might choose to file under Chapter 13 bankruptcy because they have loans that required co-signers. With this type of bankruptcy, the third parties are protected from the creditors. This means that the creditors can no longer pursue either party in an attempt to collect the debt. They must deal with the trustee that the court appointed to the particular case if they have any questions or concerns.

Bankruptcy was designed to offer consumers a fresh start after getting into a tough financial situation. Some people, however, prefer to repay their debts due to financial reasons or moral obligations. For these people, the courts offer Chapter 13 bankruptcy as a viable option.

Not only does it require the creditors to stop contacting the debtor, it also protects homes from foreclosures and third parties from legal recourse. Chapter 13 has several advantages for those who are trying to honestly fulfill their obligations.

http://chapter13bankruptcynow68.wetpaint.com/page/Chapter+Thirteen+Bankrupcy+Rules+%2830%29

Tim Wilson asked:




Prior to being able to file you must meet with a court approved credit counselor or counseling agency. You must complete a couse to better able you to manage your finances including a budget making and keeping course. This is truely helpful because a court usually wants you to propose a budget on how you are going to be able to make your expenses and make payments to your creditors if an agreement is reached.. You must also be a resident of the state you file in for a minimum of 60 days prior to the filing date.

The maximum debt allowed for filing Chapter 13 is $922,975 and unsecured debt must be less than $307,675. Certain debt cannot be included in Chapter 13 Bankruptcy including child support, alimony, educational loans, criminal fines and restitution ordered by the courts,

In this payment plan your creditor and you agree under a legal document to pay a monthly payment schedule and in return the creditors will reduce you payment and total debt owed. The court usually appoints some a trustee to recieve your payments and divide them between your creditors. As long as your payments are on time you are protected from creditors making any attempt at collection against you.

While under Chapter 13 protection, you cannot incur additional (new) debt greater than $250.00 unless you obtain court approval. This could affect you if you need a student loans or a car lease.

After you file you Bankruptcy petition, the court will usually issue an order prohibiting from collecting any portion of their debt from you, seizing property such as your car or commencing any continuing legal against you.

The whole idea behind Chapter 13 is that with the proper management of your finances you could avoid the situation. Now that the situation is being managed and supervized, you should have no further problem as long as you adhere to the plan.

Your first payment must occur within 30 days from the date your case is filed.If it is not the judge can and will dismiss your case. Approximately 6 weeks after your case is filed, their will be a Meeting with your creditors chaired by the trustee pf your case.

http://chapter13bankruptcynow68.wetpaint.com/

Steve Bingman asked:




It is not uncommon for a married couple to consider filing bankruptcy, but question whether or not both the Husband and Wife have to file. It may be a situation where one (ex. the Husband) has debts which must be dealt with while the other (ex. the Wife) is financially sound. So, is there such a thing as “Chapter 13 Husband Bankruptcy”? The answer is yes!

While it is really not called “Chapter 13 Husband Bankruptcy”, it is possible for a Husband to file bankruptcy under Chapter 13 by himself. Bankruptcy law does not require that both a Husband and Wife file jointly.

Even though only the Husband is filing bankruptcy, the income and expenses of the Wife are required when the Husband files, so that the bankruptcy court, the trustee and creditors can evaluate the household’s financial position to determine if the Husband qualifies for bankruptcy.

The Wife will need to disclose:

1. All of her creditors as well as the amount that she owes each creditor and the basis for which she owes each creditor.

2. The source and amount of her income as well as how often she is paid.

3. All of her property.

4. All of her monthly expenses such as food, housing, utilities, taxes, transportation, medical, medicine, business, etc.

Several aspects of a Chapter 13 bankruptcy are affected by a person’s household financial position including, but not limited to, the length of time for the payment plan and the eligibility of the debtor. For an accurate picture, the Wife’s information has to be included. However, the Wife is not a party to the Chapter 13 bankruptcy and is not bound by the bankruptcy.

It should be noted that if the Wife’s financial status changes during the bankruptcy, the change needs to be reported to the trustee as it can change or affect the Husband’s bankruptcy.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

This article may be republished, but the wording must not be changed and the author links must remain active.

http://rexkaufman6721.webs.com/apps/blog/show/867595-using-chapter-thirteen-bankruptcy-to-stop-foreclosure

Marcus Peterson asked:




There are certain rules that must be followed when you file for Chapter 13 bankruptcy. Bankruptcy law is a set of federal laws and statutes governed by Title 11 of the United States Bankruptcy Code.

The debtor has the exclusive responsibility for filing a plan. Although most plans are filed at the time of the petition, the debtor has up to 15 days from the filing of the petition to file the plan, unless the court allows otherwise.The plan specifies what each creditor will be paid and under what terms. Chapter 13 creditors do not vote on the plan. A creditor should object to confirmation if the plan does not properly treat its claim. Sections 1322 and 1325 set mandatory and permissive requirements of a Chapter 13 plan and its confirmation, respectively.

The three mandatory requirements are that the plan shall provide for the submission of all or such portion of future earnings or other future income to the trustee as is necessary to fund the plan; the plan shall provide for the full payment, on a deferred basis of priority claims unless the holder of the claim agrees to different treatment and the plan may not be longer than three years unless the court approves a longer payment period, not to exceed five years. The debtor may deal with a secured claim outside the plan. A plan should not be confirmed, unless the priority claims are provided for in full, and the IRS should object to a plan that does not provide for full payment of priority taxes. In the event that the IRS does not object and a plan is confirmed without properly providing for priority taxes, the IRS can move to have the plan dismissed or modified.

http://chapter13bankruptcynow35.blogspot.com/2009/04/using-chapter-thirteen-bankruptcy-to.html

Eddie Tobey asked:




Chapter 13 is one of the methods that individuals can use to file for bankruptcy. This bankruptcy filing offers individuals a way to financially reorganize themselves under the supervision of a federal bankruptcy court. Chapter 13 is mostly used by individuals with a regular source of income to rehabilitate themselves by fulfilling the plan approved by the federal bankruptcy court. This differs from a Chapter 7 bankruptcy filing in that Chapter 7 offers immediate and complete relief from several debts.

The type of bankruptcy filing is determined by a number of factors, the most important ones being the individuals? disposable income and the type of relief sought. In some cases, if it is determined that the individual just does not have the necessary disposable income to fund a viable Chapter 13 bankruptcy claim, then it is simply not possible for the individual to file for Chapter 13.

Chapter 13 provides the debtor with a plan that allows him to pay off her creditors over a period of 3 to 5 years. During this period, the creditors are not allowed to collect anything on the debt, except through the bankruptcy court.

When filing for Chapter 13, the individual filing for bankruptcy gets to keep his property and assets and the creditors end up with less money than they?re owed ? but get paid more than they would if the person defaulted on the debts.

Chapter 13 has its advantages as well as disadvantages.

The major advantages include the stopping of all foreclosures and having an ‘accelerated’ mortgage being reinstated when the bankruptcy plan is fulfilled. Certain debts that are not dischargeable under Chapter 7 can be discharged under Chapter 13. Collection activities against non-filing co-debtors can also be completely stopped for the life of the case.

One of the major disadvantages of filing for Chapter 13 is that the record stays in the individual?s credit report for 10 years. During the life of the case, the debtor has to obtain the Chapter 13 Trustee?s permission in order to apply for any additional credit. These factors tend to discourage most creditors from lending money to such individuals.

http://sites.google.com/site/chapter13bankruptcynow68/the-rules-of-chapter-13-bankruptcy