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How Does A Chapter 13 Help Me Get Caught Up On Past Due Payments?

There are two types of consumer bankruptcies, a Chapter 7 and a Chapter 13. In both cases you are able to discharge some of your debt, which makes it easier to pay the debt that remains. Filing bankruptcy can also give you the opportunity to get caught up on your past due payments, without the hassle of having to field collection calls from your creditors. These benefits make filing for bankruptcy an attractive option, but you do need to understand how a Chapter 13 is different from a Chapter 7 and how filing a Chapter 13 can help you get caught up on past due debts.

When you file a Chapter 13 bankruptcy you will come up with a plan of repayment for your debts. The plan will include a proposal of what you intend to pay for your car, for your house, and for your other debts. A Chapter 13 case also includes a provision for repayment of arrearages, especially past due mortgage payments, in a way that lets you get caught up over time rather than all at once. Here are some other distinguishing features of a Chapter 13 bankruptcy case:

• The case can last for up to five years, and during that time you will make a monthly Plan payment to the Trustee.
• The Trustee will disburse that payment to your creditors, in proportion to the debt they are owed.
• You can pay the value of your car instead of what is due, and might even be able to pay that value at a lower interest rate.
• Your house payment can be paid through the Plan, including the past due amounts. If you opted for a Chapter 7 these arrears would have to be paid up front but in a Chapter 13 you can pay them out over your Plan.
• At the end of your case, you will be considered current on debts, depending on how you repaid them throughout the case. Some debts may remain due after the case is over, but you should not come out of the case in “default” on any obligation.

The major difference between the two types of cases is that in a Chapter 7 you get to eliminate all of your unsecured debt. But, in a Chapter 13 you will pay back a percent of your unsecured obligations. In most cases the percentage is very low, and after the case is final you will not have to pay the remaining portion.

If you are considering filing bankruptcy to help eliminate debt, contact us at

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