Chapter 13 Bankruptcy – Reorganization

CHAPTER 13 BANKRUPTCY

WHAT IS BANKRUPTCY?

Bankruptcy is a legal proceeding where people who are unable to pay their debts can “discharge,” or get rid of their debts, and get a new financial start. These proceedings are handled by the United States Bankruptcy Courts, including the U.S. Bankruptcy Court for the District of Hawaii, located in Honolulu.

WHAT IS A CHAPTER 13 BANKRUPTCY?

“Chapter 13” refers to chapter 13 of the U.S. Bankruptcy code, or a personal “reorganization” bankruptcy. The reorganization involves creating a repayment plan toward the individual’s debts, taking place over a time, up to sixty months (five years). The repayment plan is based upon calculating the individual’s excess income, over and above their normal monthly expenses. The creditors (i.e. credit cards, loans, etc.) all receive a portion of the monthly payment during the life of the repayment plan. At the completion of the repayment plan time period, the remaining unsecured debts are discharged.

CHAPTER 13 – GET CAUGHT UP ON BACK MORTGAGE PAYMENTS

A Chapter 13 case is a viable alternative to save your home if you are behind on your mortgage.   Say you are behind six months on a mortgage of $2,000 per month, for a total of $12,000.00.  The amount you are behind is also known as arrears.  Perhaps you’ve gone through a tough stretch (unemployment, lower hours, etc.), but your financial picture has stabilized.  You can afford to pay the monthly mortgage again.  However, because of the arrears, you mortgage company refuse to take your monthly payment, wants the entire balance right now, and they may also want to foreclose on your home.

This is where the Chapter 13 case can come into play.  With a Court-approved Chapter 13 plan, YOU can tell the mortgage company to take what you owe in monthly pieces instead.  A Chapter 13 plan is generally from 36 months or up to 60 months.  Under this example, the mortgage company would get paid about an additional  $333 per month under a 36 month plan or $200 per month under a 60 month plan.

Finally, by the filing of a Chapter 13 case, the mortgage company must take your monthly payments again.

WHERE DO I START?

Prior to scheduling a consultation, it is very helpful to work on one of our questionnaires/worksheets, in order to help us understand your individual situation. Clicking below will bring up our INDIVIDUAL or BUSINESS bankruptcy worksheets, in Adobe Acrobat (R), or .pdf format:

• Individual Bankruptcy Worksheet

• Business Bankruptcy Worksheet

 If you do not have Adobe Acrobat (R) or Adobe Acrobat Reader (R), you can go the Adobe website to download Adobe Acrobat Reader (R) for free. Note that the “Individual” worksheet is appropriate both for single persons as well as married persons filing together.

Kendal Luke has handled numerous bankruptcy matters in Hawaii both simple and complex, for 17 years.  If you have a question about bankruptcy, or would like to set up a consult, please e-mail Kendal or give us a call at 593-2199. We’ll be happy to hear from you!

WE ARE A DEBT RELIEF AGENCY PURSUANT TO SECTION 524 OF TITLE 11 OF THE UNITED STATES CODE. WE PROVIDE LEGAL ASSISTANCE AND HELP PEOPLE FILE FOR BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE.

 

FURTHER READING ON BANKRUPTCY

Chapter 7 Bankruptcy – Liquidation