Andrew Stratton asked:




Bankruptcy lawyers are legally licensed practitioners that assist individuals or businesses with the legal proceedings involved in filing for the same. They begin by guiding their client through the necessary steps in choosing the appropriate filing option, and then continue to assist the person with related paperwork, dealings with past debt collectors, keeping them informed of corresponding state laws. The most common type filed in the United States is Chapter 7, which is relatively quick and simple, but Chapter 13 is quite common if the debtor is employed or makes money some other way.

Chapter 13 is a type of financial rehabilitation designed for individual households with a steady income to repay all of their debt in specific payment plans, and it is also referred to as the Wage Earner Bankruptcy.
Chapter 13 allows the individual to keep possession of all assets, but the person is required to continue paying on his or her debts over time. This payment process usually lasts about three to five years. The amount of payment is dependent on various factors within the situation, including the debtor’s income and personal living expenses.

Bankruptcy lawyers handle the establishment of such payment plans, and make decisions in accordance with the law, which varies state by state. If their client’s monthly income exceeds the corresponding state’s median income, the payment arrangement will usually be set to exist for five years. If their client’s income drops below their state’s median earnings, the arrangement will be set for three years unless the federal court system states otherwise.

Although having the ability to start fresh financially is generally a huge relief for people struggling with debt collectors and monetary balance, filing for bankruptcy (regardless of the chapter) also has its negative aspects.

The most obvious disadvantage is the existence of such a drastic action recorded on the debtor’s credit report for up to ten years. The individual must seek permission from the court of the same if he or she wishes to obtain extra credit while the case is pending. Also, a person involved in actual bankruptcy proceedings will be less likely to be granted loans from a creditor as long as the information remains with the Credit Bureau. Lawyers that specialize in elimination of debt and related legal proceedings can help relieve their client of the stress of foreclosures, wage garnishing, harassing creditors, liens, and repossessions associated with financial crisis, while informing their client on both the benefits and possible negative results of Chapter 13.

http://rexkaufman.vox.com/library/post/using-chapter-13-bankruptcy-to-stop-foreclosure.html

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.

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