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Chapter 13

Bankruptcy Attorney

A Chapter 13 bankruptcy is normally filed by people on the verge of losing their homes. Even if you are behind in your mortgage and your home is in foreclosure, filing a Chapter 13 bankruptcy will stop the sale of the home. Unlike a Chapter 7 bankruptcy which wipes out most debts, Chapter 13 bankruptcies are a "time out" for people in debt to allow for the restructuring of debt. A bankruptcy attorney will create a payment plan schedule, that if approved by the Bankruptcy Judge, will allow you an opportunity to get your mortgage caught up, and pay off a portion of their debt during a three to five year period. As long as you make your schedule payments to the bankruptcy trustee, a chapter thirteen bankruptcy will allow you to keep your house.

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In a Chapter 13 bankruptcy, a judge can allow a debtor to pay the value of an item that is financed, rather than the amount of the loan. This is called a cram down. For example, if a person finances a vehicle and owes $20,000, but at the time of the filing of the bankruptcy, the car is worth only $5,000, the debtor would only have to payback $5,000. The bankruptcy judge would restructure the loan and

cram-down the debt to $5,000.

One thing that can't be restructured is the mortgage on a principal residence. Everyone knows that the banking crisis of 2008 and the Great Recession was caused by the collapse of the housing bubble. Nothing would have helped the middle class, who are now upside with homes worth less than what they owe, than allowing bankruptcy judges to cram-down mortgages.

This would have prevented millions of foreclosures across the country. In 2009, President Obama proposed legislation to allow cram-downs on principal residence foreclosures; however the banking lobbyists killed the bill in the Senate. Hopefully, new legislation will be proposed to change the law, if the economy continues to refuse to rebound.

Chapter 13 debtors can cram down the

value of mortgages on properties other than on their principal residences. This allows for upside down rental and investment properties to have their loan balances reduced to their current value.

Fortunately, Chapter 13 bankruptcy can strip a second mortgage on your primary residence.

If you need to file a chapter 13 bankruptcy in Clearwater, New Port Richey, or anywhere in the Tampa Bay area, call an experienced bankruptcy lawyer. We offer FREE CONSULTATIONS to help you file your chapter thirteen bankruptcy and to help you find a solution to your economic problems.