Chicago Bankruptcy Lawyers & Attorneys

Chapter 13 is reorganization through a Chapter 13 trustee, provided for under Chapter 13 of the United State Bankruptcy Code. It allows for the repayment for all or a portion of one’s debt, over a 3-5 year period. So from anywhere typically between 36 to 60 months that individual will be making a monthly payment to a Chapter 13 trustee who will deal out payments each month to creditors, according to a certain hierarchy or priority. Chapter 13 is the perfect home-saver case. By that I mean, an individual can repay whatever they are behind on their mortgage, known as their mortgage arrearage, over the next 3-5 years, while making their regular 1st and if applicable, 2nd mortgage payment(s) on time once again. What happens with a lot home owners who are in foreclosure, is that they fall behind on their mortgage and the mortgage company wants one lumps sum payment to catch up. Well, homeowners don’t have that ability, but they do have the ability provided that they are back working, or they are not ill, to make a monthly payment to a trustee which will pay off that mortgage arrearage over the next 3-5 years. And while they are in this repayment plan, they are allowed to make their regular mortgage, on time, going forward. So, a Chapter 13 is most commonly used as the home-saver case. It is a great way to save a home that is in foreclosure when the mortgage company is not willing to work with the homeowner and the mortgage company is not looking to modify the loan. Chapter 13 provides sort of a modification, where you say “hey I am going to pay the regular mortgage payments on time again and I am going to pay the part where I fell behind over the next 3-5 years”. Yes, Chapter 13 is really a great home-saver case.

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